A special report for Entel

Download three more topical reports to share with your colleagues at: research.informatm.com/Entel

Chief Research Officer Informa Telecoms & Media mark.newman@informa.com

Mark Newman

IntroductIon

The mobile Internet was born with an identity crisis. Was it meant to be the same desktop Internet that consumers were already familiar with, but simply accessible via a mobile phone? Or was it meant to be a different Internet, based on the same remotely-hosted content but intentionally populated with features that explicitly leveraged the unique functionality of wireless devices? The question has not yet been answered and at present the mobile Internet finds itself inadequately defined as a bit of both, yet not conclusively either. With both potential models, namely mobile access to the Internet and made-for-mobile Internet, currently being encouraged and developed by different members of the mobile Internet value chain. Mobile operators are going through their own identity crisis. Ten years after the launch of WAP services mobile operators are still trying to figure out their position in this mobile Internet value chain. Do they have any role beyond providing the bit-pipe to the Internet and if so, how do they monetise that role? Two-sided business models and advertising are two potential revenue-generating opportunities. But these are tough businesses to crack so long as advertising remains the dominant business model for companies offering mass-market communications and entertainment service on the Internet. There is nothing to suggest that from their perspective or from that of consumers the mobile Internet business model should be any different from the fixed Internet.

There are two other key issues that mobile operators are grappling with as they seek to forge their role in the future services value chain. The first relates to handsets mobile phones and the extent to which the mobile Internet experience is enabled and shaped by the handset manufacturer or the computing platform that sits within the handset. If these mobile platforms become dominated by device manufacturers or by Internet companies extending their services from the PC into mobile phones then mobile operators will lose their role in the provision of new services. The second issue relates to whether mobile operators can profitably carry large volumes of mobile Internet traffic. Flat-rate pricing has been great for consumers but the massive surge in video and P2P traffic risks undermining the profitability of mobile Internet and mobile broadband services. The success of mobile broadband services, the iPhone and other smartphones suggests that mobility is on the verge of becoming the most important development in the evolution of the Internet. The real question is how mobility changes the Internet and how the traditional mobile players change their business models to guarantee their futures.

Mark Newman

We have research offices in every continent: Beijing Boston Brisbane Dubai Johannesburg London Raleigh San Francisco Sao Paolo Singapore

For full contact details see page 19 or: Call: +44 (0)20 701 74994 Email: marketing.enquiries@informa.com

2 Informa Telecoms & Media 2010

contEntS

Mobile Internet 2.0: introduction and definition

Jamie Moss
Senior Analyst

Operators and social networks still working out what each can bring to the table
Senior Analyst

Guillermo Escofet

Mobile cloud computing will shift applications development to the Web

Malik Saadi
Principal Analyst

14

Your global research partner

Informa Telecoms & Media delivers strategic insight founded on global market data and primary research. We work in partnership with our clients, informing their decision-making with practical services supported by analysts. Our aim is to be accessible, responsive and connected, both to the markets we serve and to our clients business goals.

n Our global analyst teams have a deep understanding

of the evolving telecoms and media value chain. Our research programme combines local market insight with sector based analysis for a complete, integrated view.
n Our research expertise is built on the in-house

collection, validation and analysis of primary data. We track and forecast new and established datasets, using proven, robust methodologies.
n Our services drive decision-making. Our data,

forecasting and analysis, supported by interaction with clients, provides real value.

Jamie Moss

Senior Analyst Mobile Content and Applications jamie.moss@informa.com

MobIlE IntErnEt 2.0: IntroductIon and dEfInItIon

22 January 2010

Defining the Mobile Internet

Like any wireless service with a well-established and instantly identifiable fixed-line parallel, the mobile Internet was born with an identity crisis. Was the mobile Internet meant to be the same as the desktop Internet that consumers were already familiar with, but simply accessible via a mobile phone? Or was it meant to be a different Internet, based on the same remotely-hosted content but intentionally populated with features that explicitly took advantage of the unique functionality of wireless devices? The question has not yet been answered and at present the mobile Internet finds itself inadequately defined as a bit of both, yet not conclusively either. Both potential models mobile access to the Internet and made-for-mobile Internet are currently being encouraged and developed by different members of the mobile Internet value chain (see fig. 1). A natural, theoretical path for the mobile Internet to take would be to evolve from offering selected content accessed via less functional versions of fixed-line Internet

Fig. 3: The two models of the mobile Internet

Company with content Company with content

Internet .com

vs.
.com

Internet .mobile

Mobile access to the Internet Source: Informa Telecoms & Media

Made-for-mobile Internet

Fig. 1: The two models of the mobile Internet

service delivery protocols (see fig. 2). It would initially use the same service delivery protocols as the fixed-line Internet but restrict the content as dictated by practical considerations such as the throughput limitations of the access network infrastructure, the display limitations of the devices and the processing limitations of the devices.

Fig. 4: Theoretical evolution of the mobile Internet

Time

Level of evolution

Description Content-restricted and heavily display-restricted. Providing basic rendering of selected content, purposely programmed in WML. WAP gateways translate the content for display on mobile devices. Desktop Internet content but with reduced functionality, using transcoding to remove features and content that cant be displayed or translated to a mobile. Proxy servers translate the content for display on mobile devices. Unrestricted desktop Internet content but on a smaller screen, including vector-based graphics and Java applets, courtesy of desktop-equivalent mobile browsers. Access to all desktop Internet content as well as mobile-specific content that is only usable on a mobile phone. With the at-will ability to switch between both.

Past

WAP

Optimized Internet Present

Full Internet

Future Mobile Internet

Source: Informa Telecoms & Media

Fig. 2: Theoretical evolution of the mobile Internet 4 Informa Telecoms & Media 2010

MobIlE IntErnEt 2.0: IntroductIon and dEfInItIon

The next stage would be to offer a fully-featured fixed-line Internet experience on mobile, providing access to the same content via the same delivery protocols. Ultimately, it would evolve to offer a mobile Internet that provides all of the relevant content and functionality of the fixed-line Internet, as well as unique features that are only possible by using the possibilities offered by mobility. However, in practice the development of the mobile Internet has not been linear. Although Wireless Application Protocol (WAP) was first launched commercially in 1999, it remains a valid element of the mobile Internet and forms the lowest common denominator level of service for the majority of all GSM- and WCDMA-evolved handsets. At present, the most common mobile Internet service experience consists of browsing an optimized Internet, where users access visually (and sometimes functionally) reduced versions of desktop Internet content. The optimization is accomplished either by the deliberate repurposing of content by third-party transcoding entities or simply by default of the rendering limitations of users mobile browser. Mobile Internet users are also currently accessing mobile-specific sites although the amount of content available is relatively small; currently made-for-mobile content that is purposely designed to take advantage of the signature functionality of a mobile phone, its mobility, is particularly scarce. The development of mobile-specific content and the pursuit of a full desktop-equivalent browser experience are actually occurring in tandem. However, no single mobile browser is yet able to offer desktop-equivalent functionality and those that come closest are only available on a handful of high-end devices that constitute a very small portion of the installed base. The key to the success of the mobile Internet undoubtedly lies in the end-user experience. The desktop experience is largely perceived as satisfying, while the mobile one is typically seen as not; the overarching task at hand is to narrow the difference between the two as much as possible. The Internet experience for an end user has two fundamental components the visual experience and the service experience: The Visual Experience is about formatting and presentation. Most of the tags in HTML and other mark-up languages are dedicated to describing how the content should look. This includes the size, color and font of the text; the dimensions and alignment of images; as well as the properties of columns, rows and borders of cells and tables. The processing power and display capabilities of desktop computers have not usually provided any sort of a content bottleneck, with the richness of the visual experience instead being determined by the speed of the Internet connection. As dial-up services were replaced by broadband and as broadband became faster, new and higher-quality content emerged to fill the fatter data pipes, with browsers being augmented by proprietary plug-ins for rendering and streaming new types of content such as video, audio and real-time vector graphics. In contrast, the visual experience of the mobile Internet is determined first by the display and rendering capabilities of the mobile device and second by the ability of the wireless network to deliver the content needed to create it. Mobile phones have far less capable application processors as well as much smaller screen resolutions than desktop computers, making much of the graphical content already resident on the Internet impracticable for presentation on mobile. Display and processing capabilities also vary far more from device to device than in the desktop computer industry, with the need to consider typical device ability rather than just that of the high-end models being far more pronounced in the mobile sector. The Service Experience is about immediacy. Regardless of the richness of the content, it must be presented in a timely enough fashion to make the service usable and therefore useful to the consumer. Simply delivering the required content is not enough, if it takes too long to transmit then, regardless of its quality, the user experience is ruined. Almost instantaneous provision is now considered the norm by most Internet users. Their day-to-day experiences of using the desktop Internet having heightened their expectations concerning the quality of service that is considered acceptable and therefore worth paying for. In the desktop Internet domain, content richness followed bandwidth availability, not vice versa. Conversely, in the mobile industry, Internet connection speed has always been playing catch-up to content richness, due to the fact that the vast majority of Internet content was designed to be accessed using high-bandwidth fixed-line connections, not lower-speed wireless connections. The reason why the availability of bandwidth in the mobile domain is more restricted is due to fundamental
5

The Internet user experience

The use of the term Internet instantly brings to mind the desktop-computer, full-screen-browser experience. It is an experience that was first characterized by animated graphics, pictures, tables and richly formatted text; and latterly by high-bandwidth multimedia content such as streaming audio and video, file downloads, Java applets and real-time vector-based graphics. As time has gone by, end-user expectations of what an Internet experience should constitute have become more demanding and potentially harder to fulfill using a mobile device. When the first remotely-hosted wireless data services were launched using WAP, inappropriate marketing tactics, a desire to promote the mobile Internet using the image of desktop Internet and a lack of honesty about the operational and functional differences between the two, resulted in unrealistic end-user expectations. The considerable technical achievement of WAP in providing a successful remotely-hosted data access service was entirely undermined commercially by the form that the services took; a form that was determined by the explicit technical restrictions of both the access mechanism (the wireless networks) and the viewing medium (the mobile phones).

technological limitations in the operation of todays wireless air interface technologies, as well as the total amount of actual capacity made available to service providers through radio spectrum license allocations. The challenge presented by radio-wave-based transmissions and the problem of capacity being a limited physical resource does not exist for fixed-line Internet access. The practical importance of providing a fixed-lineequivalent quality of service, or at least the perception of it, has been highlighted by the UK advertising campaign that accompanied the launch of the iPhone 3G in 2008. The television advert said: This isnt a watered down version of the Internet, or the mobile version of the Internet, or the sort-of-looks-like-the-Internet Internet its just the Internet, on your phone. In reality, the mobile Internet browsing service delivered by the mobile version of Apples Safari browser does not provide a desktopequivalent version of the Internet. But the manner in which the content is displayed (see fig. 3) and navigated through on screen does provide a level of freedom, in terms of access and control, that immediately calls to mind the desktop Internet experience. The primary strength of the iPhone platform resides in its user interface and the user experience that it provides, rather than the actual provision of never-before-seen services and/or levels of service functionality.

beneficial to increase the similarities between the two so that the mobile Internet seems less distant from the desktop experience, but it is still possible to have an equally enjoyable and useable browsing experience by keeping the mobile Internet as something different. Developing a consciously different experience can still help to narrow the experience gap and create a service that is no less satisfying to use. It may even create one that is more satisfying by eliminating some of the irritations and extraneous content, such as the intrusive pop-up windows and obscuring transparent overlay adverts that have become inexorably associated with desktop Internet browsing. The possible benefit of not having a desktop-equivalent browsing experience on mobile raises the question of whether it is practical or even desirable to attempt to deliver mobile access to the Internet. Even if mobile browsers become as fully featured as desktop browsers and even if the processors in mobile devices become as capable as those in desktop computers, the wireless throughput rates for getting content to the device will never match that of the fixed-line, presenting a constant service bottleneck. There will always be a large gulf between the throughput rates of mobile broadband and fixed broadband, and the richness of desktop Internet content will always be geared towards the throughput rate that the majority of fixed-line broadband access subscriptions can support. Additionally, it needs to be taken into account that end users are most likely to want to use the mobile Internet when they are in transit rather than on the street or in a building. They will therefore be in trains, cars or buses; these are environments where sustaining a high bandwidth throughput rate is even more difficult due to the Doppler effect induced into the end users signal reception by the high-speed motion of the terminal. The priority of different types of mobile communications could also prove to be an issue in the future. Although 3G+ networks may have capacity to spare at the moment, this will become filled as all GSM subscribers eventually migrate across to 3G+ technology. Within more congested networks, call prioritization will be required to ensure that mobile operators core business of timecritical voice calls is not affected by packet-based data-only traffic. In this scenario, full, desktop-equivalent Internet access may add unnecessary traffic and prove harder to deliver over time.

Mobile on the iPhone

Consequently, narrowing the difference between the desktop and mobile end-user experience doesnt necessarily mean making them identical. It can be

Fig. 3: Safari Mobile on the iPhone

ecoms & Media

6 Informa Telecoms & Media 2010

MobIlE IntErnEt 2.0: IntroductIon and dEfInItIon

The Internet is evolving
and mobile-specific content development. But the process will not lead to two separate Internets, one for the fixed line and one for mobile, as there can only be one Internet in terms of underlying server infrastructure and remotely-hosted content. Instead, different portions of that Internet will simply come to be intended for access by different devices. This analysis has been taken from the Intelligence Centre, for more information about the service please visit: www.intelligencecentre.net/mobile-contentapplications/

The mobile phone and the desktop computer are not competing devices, they are not designed to do the same thing so should not be compared with one another. They are different means of accessing the same web of remotely-hosted information and are best suited to delivering different Internet-based services. Consequently, the mobile Internet should not be seen as just a subset of the desktop Internet. It merely appears to be at present due to the fact that relatively little genuinely mobile-specific content has been produced; much of the content that is available to mobile devices is simply a cut-down version of content originally designed for access via the desktop. Similarly, the fixed-line Web and the Internet at large are at currently considered synonymous, but only because the desktop has until recently been the only practicable medium for accessing the Internet. This has naturally meant that most of the content within the Internet at large has by default been designed first and foremost for the desktop. However, the Internet at large will evolve in fact, it is in the process of doing so already. It is expanding beyond just the fixed-line, to encompass remotely-hosted content that is intended for enabling both desktop-only services and mobile-only services, as well as common content that will allow cross-platform service functionality. But, as it evolves, the Internet at large will remain the same single entity that it always was, namely the entire world of remotely-hosted content (see fig. 4). A lot of discussion has taken place about what the mobile Internet is, but most has been based upon the current state of development of the Internet at large and not about its potential evolution. There has been too much mobile access to the Internet versus made-for-mobile thinking, with both views being too restrictive. The mobile Internet as a service will find its own way, as each of the necessary enablers for it fall into place: handset processing capabilities; browser display capabilities; access network throughput rates;of the Internet as Fig. 6: The evolution mobile data tariffs;

mobile content increases

The Internet

The Internet

The Internet

Fixed-line Web

Mobile Web

Fixed-line Web

Fixed and Mobile mobile Web

Fixed-line Web

Fixed and mobile

Mobile Web

Fig. 4: The evolution of the Internet as mobile content increases

Source: Informa Telecoms & Media

Complete

Games

Connected

Social networking

banking

Messaging

M2M

Payments

interface

Music

Widgets

Mobile Content & Applications

Whether you are looking to grow, diversify, acquire or defend your market, a subscription to the Intelligence Centre will provide you with the analysis, insight, market data and forecasts to underpin major decisions and reduce risk. Featuring 10 sector focused channels across TV, broadband and mobile, the Intelligence Centre provides comprehensive and unmatched topic, country and company coverage, as well as a library of presentations from Informa Telecoms & Medias extensive conference programme.

Make better business decisions, starting today: www.intelligencecentre.net/mca

Join us on LinkedIn: www.informatm.com/linkedin

Follow us on Twitter: www.twitter.com/informatm

Email us: marketing.enquiries@informa.com

strategies

Location

Money

strategies

vendor

Valuable

Applications

Content

Regulation

Applications

video

Mobile

TV

models

billing Operator advertising

Independent
Business

trends

User

Consumer

Enterprise

Dedicated
services
Internet
communities

Accessible

Subscribe to our Connect email www.informatm.com/connect

Senior Analyst Mobile Content and Applications guillermo.escofet@informa.com

Guillermo Escofet

opEratorS and SocIal nEtworkS StIll workIng out what Each can brIng to thE tablE
26 March 2010
n Some social networks, such as Sonico in Latin America,

are beginning to offer user-ID info as a way of wooing operators with largely prepaid customer bases. n Some operators, meanwhile, are looking to provide greater security and universal logins to social networkers. n As long as social networks main focus on mobile is extending reach, not revenue, they wont seek a closer relationship with operators. n The fear of becoming dumb pipes and doubts about what value they can add to social networking stop operators from moving closer. Mobile-data and -messaging costs remain a major barrier to adoption of social-networking services on phones, with at least one deployment in Peru failing because of it. Social networks need operators to make their services more accessible and affordable on phones, while operators need social networks to promote their mobileWeb services. And although there are plenty of examples of them teaming up, their relationship remains guarded. Many operators want to advertise access to popular social-networking sites that users are familiar with online to encourage mobile-Web usage and sell more data. Social networks are happy about the publicity and any help that operators can lend to facilitate access to their services from mobile handsets such as preinstalling apps and offering special data or messaging plans. But that is as far as it goes.

For example, operators expect social networks to foot all the costs of adapting their services to different handsets and networks. Although these porting costs might be small change for big sites, such as Facebook, they can represent a considerable expense for smaller, less-wellcapitalized sites. Social networks focus on mobile is mostly as a means of extending their reach rather than as a source of additional revenue. And as long as that remains the case, the likes of Facebook and Twitter wont be too bothered about forming a closer relationship with operators, according to Angel Gambino, vice president of business development at Latin American social network Sonico, and formerly with fellow social network Bebo (as well as the BBC and MTV). Operators, meanwhile, have an ambiguous attitude toward social networks. The very quality that makes social networks useful pawns in operators marketing strategies their huge popularity among Web users (see fig. 1) makes operators fearful. With mobile users flocking to the services of online brands, operators fear turning into the dumb pipes they so dread becoming. This makes many operators nervous about engaging with such brands. Also, many operators are uncertain of what role they can play to attain some relevance in the delivery of third-party social-networking services to mobile users. They are trying to work out how they can add enough value to become vital partners for social networks and vital intermediaries for end-users.

Total unique visitors Sites Total mobile Web audience Facebook.com Google Telefonica Orange Vodafone Yahoo BBC Microsoft Apple Nokia Visitors (000s) 15,947 4,986 4,567 3,731 3,553 3,310 1,995 1,851 1,639 1,525 1,147 Sites Total mobile Web audience Facebook.com Google Orange Apple AOL (incl. Bebo) Vodafone BBC Microsoft eBay Flirtomatic

Total pages viewed Pages views (000s) 6,659,428 2,635,771 894,273 252,294 177,648 158,988 135,003 104,303 103,566 95,662 92,654 Sites Total mobile Web audience Facebook.com Google Microsoft Orange AOL (incl. Bebo) Apple Inc. Vodafone BBC Flirtomatic Yahoo

Total minutes Minutes (000s) 4,792,411 2,156,886 395,576 165,725 138,529 106,446 104,118 89,126 83,614 54,503 48,685

Fig. 1: UK, top 10 mobile Web sites, Dec-09 9

Fig. 2: Global, operator-deployed mobile community services, by type and provider, 4Q09
Blogging 1% Chat-room service 13% Communities aggregation service 7% Content-sharing service 7% Dating service 4% Photo/video-uploading service 3%

Social networks 37%

Fig. 2: Global, operator-deployed mobile community services, by type and provider, 4Q09
Blogging 1% Chat-room service 13% Communities aggregation service 7% Content-sharing service 7% Dating service 4% Photo/video-uploading service 3%
Blogging

Instant messaging 28% Communities aggregation service Carrier 100% Content-sharing service Carrier 14%

Chat-room service Carrier 100% Carrier 100%

Social networks 37%

Third party 86% Dating service Third party 25% Instant messaging Both 4% Carrier 68% Third party 67% Photo/video-uploading service Carrier 33% Social networks Both 3% Carrier 14%

Third party 29% Carrier 75%

Instant messaging 28%

Third party 84%

Blogging 100%

Chat-room service 100%

Carrier Fig.Carrier 2: Global, operator-deployed

Source: Communities aggregation Content-sharing service Informa Telecoms & Media service Carrier Carrier mobile community services, by type, 4Q09 14% 100%

Demand for such safeguards is bound to increase as Instant consider Photo/video-uploading Social Some operatorsmessaging the best such service to be networks cases multiply of pedophiles and other undesirables service Both preying on young and impressionable social-networking Third party aggregating the connections to all of a users online Both Carrier 4% 3% 25% Carrier 14% users, resulting in horrific headlines of abduction, rape Third party communities in one place on the phone, 33% as in an such 29% and murder. Carrier enhanced address-book. Vodafone is a pioneer on this
Third party 86% Dating service Carrier Third front, exemplified by its Vodafone 360 service. party Third party 75% 67% Source: Informa Telecoms & Media 68% 84%

Aggregator role

Beyond grouping all users social-networking contacts in the phones address book, and providing a single point of access to all of a users online communities, Vodafone also harbors ambitions of creating its own community around the 360 service. Bob Rapp, head of user communities at Vodafone Group, spoke at the Mobile Social Media conference in London in mid-March of an uber-community sitting on top of users other social networks connected to 360. The online origins of social-networking services dont stop some operators from trying to compete head-on with the online brands by creating their own social networks. Such cases are found mainly in emerging markets, where fixed-Internet penetration is relatively low and the online brands are not as dominant. For example, mighty Mexican carrier Telcel offers two own-brand social networks, Conexion Ideas and Vota y Conecta, as well as two chat services. A survey conducted in 4Q09 by Informa Telecoms & Media on mobile community services offered by operators around the world found that a big proportion were operator-branded though mainly IM and chat services (see fig. 2).

Some operators are working with Internet-standards bodies, such as WC3, to create a common login and user ID for all social networks, with mobile networks potentially playing an authentication role, according to Claudio Venezia, who works at Telecom Italias research arm, TI Lab. But many in the social-networking sector feel that the idea of a common ID is misplaced, arguing that a lot of people like to use different identities for different social networks, depending on the kind of community they are connecting to. The kind of persona (including username) that people want to portray to fellow community members can vary greatly according to whether the social network is geared toward professionals, alumni, flirting and dating, or enthusiasts of one kind or another. There is evidence that fears about privacy violations are prompting a change of behavior among social-networkers that could encourage greater use of mobile phones for social-media communication. There are plenty of well-publicized stories of people falling foul of employers or spouses because of indiscrete comments or liaisons made on social-networking sites. According to socialmedia guru and Harvard University professor David Weinberger, such stories will lead to a shift away from public communication on social-networking sites to more-private forms of communication which would lend itself well to the private nature of mobile phones, according to some industry insiders.

Security role

Other operators see providing security as the most useful role carriers can play. With SIMs providing a unique identifier for mobile handset users, linked to network-held subscriber information, such as age and sex, operators can go a long way toward ensuring that people accessing a social network via a mobile connection are who they say they are. SIM authentication could also be used to verify the identity of social-network users on PCs, by asking them when they log in to key in a password texted to their phones a method that is increasingly being used in some countries as an additional security measure for online banking services.

10 Informa Telecoms & Media 2010

opEratorS and SocIal nEtworkS StIll workIng out what Each can brIng to thE tablE
Wooing operators Data-cost victim

User identity is something that, inversely, social networks can help operators with in markets where operators lack enough knowledge about who their users are. This is the case, for example, with Sonico, a Latin American social network with 42 million registered users (see fig. 3). Because of the high percentage of prepaid mobile users in Latin America, operators there face high levels of churn and have little or no idea who most of their subscribers are. Sonico has been looking to partner with mobile operators in the region to make its service more accessible and affordable on phones but hasnt found operators to be very responsive. That is, until it started explaining to them that if they allied themselves with Sonico they could potentially have access to the social networks user information. Such info includes the individual e-mail address that each Sonico member uses as his username. Dangling this carrot in front of carriers has helped pique their interest, Sonicos Gambino told Informa. The heavy data traffic that social networking can generate on phones, in terms of both browsing and messaging, means that the biggest barrier to adoption is often cost. In countries where most mobile users still pay for data on a per-kilobyte basis and for SMS on a per-message basis, the cost of regularly checking social-network profiles and receiving social-network updates can quickly add up. Added to that is the fact that a large proportion of heavy social-networking users are young people still at school or college, with little disposable income.

Guy Reiffer, vice president of marketing at messagingsoftware vendor Colibria, told delegates at the Mobile Social Media conference that the per-kilobyte pay-asyou-go model of charging for data conspired against the success of Colibrias deployment in Peru of a socialnetworking messaging service. The prohibitive data charges faced by most users meant that the service got little take-up. Reiffer did not go into more detail, but it is fair to assume that he was referring to the Facebookconnected instant-messaging service that Colibria deployed last year on behalf of carrier Movistar Peru, as part of a Latin America-wide deployment for carrier group Telefonica. Another instant-messaging service deployed by Colibria, on behalf of Malaysian carrier Maxis, has also faltered. There is a notice on the Maxis Malaysia Web site saying the service has been shut down. Mark Watts-Jones, head of product management at Orange UK, who also spoke at the conference, said that prepaid users in the UK spend, on average, 12 (US$17.80) a month on mobile, so they have little spending money beyond just calls and texts. But, at the same time, this demographic is precisely the most interested in keeping in regular touch with their socialnetworking friends.

Fig. 3: Sonico, breakdown of registered users

Spain No. of users: 1,870,815

Mexico No. of users: 5,113,562 Venezuela No. of users: 2,993,305

Colombia No. of users: 5,071,989 Peru No. of users: 3,783,205

Brazil No. of users: 8,730,473

Argentina No. of users: 3,492,189

Source: Sonico
Fig. 3: Sonico, breakdown of registered users 11

opEratorS and SocIal nEtworkS StIll workIng out what Each can brIng to thE tablE

Top-ups a month User gets Plus the following benefits

10 The 10 credit paid for 300 free texts worth 30 Free Facebook access worth 9*

20 The 20 credit paid for 600 free texts worth 60 Free Facebook access worth 9*

30 The 30 credit paid for Unlimited free texts worth 100 Free Facebook access worth 9*

*Saving based on example usage of 20 minutes a day on Facebook. Free data usage on Dolphin capped at 50MB a month.

Fig. 5: Global, prices of operator-deployed mobile community services, 4Q09

Fig. 4: Orange UK, details of Dolphin prepaid plan

Highest

0.03

0.28

9.07

0.30

1.50

0.22

2.91

3.95

20.00

Price (US$)

Average

0.02

0.14

2.82

0.11

0.48

0.12

0.79

2.35

6.51

Lowest

0.001

0.002

0.12

0.01

0.12

0.003

0.05

1.62

0.64

te

ay

pe r m un es de sa fin ge ed )

0K

ee

yt

ab

rS

rM

rd

r1

rw

ilo

eg

Pe

rk

Pe

Pe

Pe

Pe

Pe

rm

Pe

Fig. Source: Informaoperator-deployed mobile community services, 4Q09 5: Global, prices of Telecoms & Media

Orange UKs answer to that dilemma has been to offer this demographic free mobile access to Facebook by far the UKs most popular social network, both online and on mobile to get them to churn or stick to Orange. By topping up their accounts by a minimum of 10 a month, Orange Dolphin prepaid users get up to 50MB of free access to the Facebook mobile Web site (see fig. 4). The business model for Orange is to guarantee at least 10 spending on credit per month from prepaids. And the benefit for Facebook is a greater number of page impressions, generating more ad inventory that it can sell to advertisers the sites main source of income. According to Informas 4Q09 survey of operator-deployed mobile community services, the average price per megabyte charged by operators was US$2.82, per SMS was US$0.11 and per MMS was US$0.48 (see fig. 5). Operators also offer flat fees on a subscription basis to make the cost for users more predictable. The average flat fees per day, per week and per month are US$0.79, US$2.35 and US$6.51.

Informa viewpoint

Operators have the potential to find a role in the delivery of third-party social-networking services to mobile users through services such as aggregation and security but only if they do so without dictating choice to end-users. Services that provide a prescribed range of social networks that users can connect to, rather than leave the choice entirely up to them, wont be well received. Also, user-ID programs that interfere with users scope for self-expression will see little adoption. There is also the question of how much the big social networks, such as Facebook, really need the operators. Getting operators to offer special prices for access to specific social-networking sites is certainly useful, though it will become less so once flat-rate-data plans becomes more widespread. Meanwhile, OS and handset vendors are providing easy and compelling ways for social networks to create applications that integrate their services with mobile handsets, without having to wait for the help of slow-moving operators. This analysis has been taken from the Intelligence Centre, for more information about the service please visit: www.intelligencecentre.net/mobile-contentapplications/

12 Informa Telecoms & Media 2010

(ty

Pe

Pe

rm

on

by

th

Market size markets

Connected Local area Valuable

Usability platforms Multimedia
Value chain

software

Accessible

retail

Independent
Portfolios

Consumer trends

application Business models Innovative Mobile Distribution

Local

OEMs/ODMs

broadband
technologies

Manufacturing

Mobile Handsets & Devices

Whether you are looking to grow, diversify, acquire or defend your market, a subscription to the Intelligence Centre will provide you with the analysis, insight, market data and forecasts to underpin major decisions and reduce risk. Featuring 10 sector focused channels across TV, broadband and mobile, the Intelligence Centre provides comprehensive and unmatched topic, country and company coverage, as well as a library of presentations from Informa Telecoms & Medias extensive conference programme.

Make better business decisions, starting today: www.intelligencecentre.net/handsets

Join us on LinkedIn: www.informatm.com/linkedin

Follow us on Twitter: www.twitter.com/informatm

Email us: marketing.enquiries@informa.com

Components

Complete

Segmentation

trends

networking

Financials

Usability

Operating systems

Smartphones

Navigation

Dedicated

Subscribe to our Connect email www.informatm.com/connect

13

Malik Saadi

Principal Analyst Handsets & Devices malik.saadi@ informa.com

MobIlE cloud coMputIng wIll ShIft applIcatIonS dEvElopMEnt to thE wEb

20 January 2010
Despite the proliferation of smartphones and efforts of promoting native development and runtime platforms, Web-based services are emerging as cost-effective challengers that could take application runtime to the Web environment. Not only will this allow the development of cheaper and advanced applications, but it could also shift computing resources and their management from the device to the cloud the cloud is a concept whereby content is partly or entirely processed, hosted and controlled over Internet access. This approach could lower the barriers for enabling advanced applications over non-smartphone terminals using the Internet. The fragmentation of OSs, user interfaces (UIs) and runtimes and associated developer programs are also likely to hamper any advantage gained from open mobile applications development. Open OS platforms are often differentiated by their level of support to multimedia and graphical capabilities, network connectivity options, input methods and hardware performance. Chipset manufacturers will find it increasingly difficult to maintain a high-performance and enhanced user experience over different platforms and their associated versions because each platform requires a deep integration with the device hardware and a number of optimization cycles are needed to ensure overall system stability and improved performance. Porting an application to several OS platforms is a good reason for failure among independent software vendors (ISVs), but is necessary to achieve economies of scale and reach a wide audience. In addition, development tools associated with different OSs often lack the cross-platform approach that could enable the developer to write the application once and distribute it across various devices powered by different OSs. Mobile native application developers are stymied by the extreme difficulty of writing mobile apps for multiple OSs, UIs and runtime environments, especially when there is no clear winner and diversity is just increasing with the mushrooming number of app stores. Then there is the challenge of finding the right placement for this content so that it can be discovered easily by the end user. Native applications developers also need to bear the cost of testing, certification and distribution of their applications. The majority of OEMs, operators and mobile app store (MAS) owners are imposing their own test and certification programs on developers. Testing fees are based on the complexity of the application submitted and are between US$250 and US$4,000 per submission. If the application is meant to run over a variety of devices and terminal platforms, the third-party developer pays the full test fee for one device and gets a rebate for testing the same application on a second device. Additional fees might also be required for network-based applications. In addition, different OEMs and operators have different criteria for application testing in their certification programs. Native applications developers need to comply with these additional programs if they want their applications to reach different MASs and operator portals, which translates into additional cost burdens.

Smartphones are limiting the appetite for applications development

In recent years, the mobile industry has moved from proprietary to open, allowing for continued improvements in device hardware and more innovation at the application level through the creation of developer communities and application distribution mechanisms. This trend has attracted the majority of device vendors and operating system (OS) developers as well as the mobile operators, which are now eager to offer their own branded app store and subsequently an immersive user experience and advanced mobile applications to their customers. As a result, there has been a strong increase in smartphone OS handset shipments, estimated by Informa Telecoms & Media at 216.3 million units in 2009, up 34% on the previous year. By 2014, sales of smartphones will reach 572.5 million units, representing 40% of total handset sales. This trend is actually encouraging developers to create applications that are targeted at different OSs and native runtime environments. There are many advantages in developing mobile applications natively, including better integration with the device functionality, highperformance, always-available capabilities, and access to greater support from device vendors through the availability of advanced tools and developer programs. However, there are also many challenges facing native application developers, which include: code complexity, which could affect the cost of the application development and time to market; application portability across a wide range of devices to achieve economies of scale; and restricted application distribution to operators and OEMs channels. Moreover, in the case of Apple, application approval has been a contested topic that has alienated several high-profile app developers from Apples App Store.
14 Informa Telecoms & Media 2010

Also, an obvious difference between desktop and mobile native applications is mobile connectivity. Compelling applications should make maximum use of the customers mobility, from mobile location services through to interactive games. Simply replicating the desktop experience will not be enough to sustain long-term growth; users will not pay for mobile versions of applications that are available either free or nearly-free on their desktop computers. For these reasons, generating native applications that address the long tail of consumer requirements and different consumer groups using various OSs and UIs could be cumbersome, costly and time-consuming.

In the past year, several trends have crystallized around mobile Web runtime technology which promise to transform mobile Web applications development, distribution, installation, execution and management. A number of new OSs, including Googles Android and Palms webOS, and a number of mobile platforms, including Microsofts Silverlight, Nokia MWRT, Qualcomms Plaza Mobile Internet, Adobes AIR, Access Netfront Widget platform and Opera Widgets, are designed with Web connectivity and functionality in mind. The whole idea is to enable the easy transition of applications development from a native environment to the Web environment. A number of operators, including Vodafone, Orange, T-Mobile, O2, Verizon, AT&T, KDDI, NTT DoCoMo, Softbank and China Mobile, have already developed or are in the process of developing widget stores and Web developer programs that will make the development and distribution of Web applications easier and content discovery and management simpler on the mobile screen. For example, the aim of the Joint Innovation Lab (JIL) initiative founded by Vodafone, China Mobile, Softbank and Verizon is to stimulate a new generation of mobile Internet applications around which they can build their service plans and value-added services. JILs first project is to develop a widget ecosystem with a single point of access to enable developers to tap into the combined customer base of the four JIL operators estimated at 1.1 billion subscribers. The trend towards the adoption of the Web as a mobile applications development environment is likely to intensify thanks to both the emergence of mobile cloud computing and the low latency of the next-generation access networks, which include LTE, HSPA+ and WiMAX. Informa expects the Web to become the new ubiquitous platform for application development as more and more applications move to the cloud and allow users to access their personal information anytime from any device and over any access network. This trend is likely to remove smartness from the device to the cloud, which could potentially reduce the burden of fragmentation that the native development environment suffers from and spur innovation through the involvement of the much wider Web developer community in creating contextual mobile applications. In addition, this trend will help to shift processing and storage resources to the cloud, which means advanced applications could be accessed by more resource-constrained devices. This could in turn widen the addressable market for the cloud applications beyond the smartphone market. By increasing the reliance of end users on the Web and cloud applications, new business models will emerge and revenues will be diversified from multiple sources that include advertising, network API charges to thirdparty service providers and the creation of premium services for

The shift to Web runtime and cloud-based services

The mobile Web applications development environment is an emerging alternative to native applications. This shift is best illustrated by the rush of operators and handset vendors to provide their own widget ecosystems which use Web technologies to facilitate mobile applications development and lower the overall development cost. It could also enable mobile operators and vendors to tap into the wealth of the Internet and address their customers with contextual applications that are more relevant to them. Until recently, a number of barriers prevented Web-based applications and cloud services from gaining ground in the mobile market, including: the cost of connecting to Web services; the low-bandwidth and latency provided by current mobile access technologies; the bad quality and performance of mobile browsers and related Web technologies; and security issues. Despite their current shortcomings in terms of performance, power consumption, integration and always-on capabilities compared with native applications, Web applications have many advantages including: faster development, time-to-market and monetization; wider distribution channels; and adaptability for cross-platformization. There are many changes in the mobile market that are likely to shift applications development to the Web including: n The accelerating migration towards mobile broadband services. n The dramatic improvement in mobile browser solutions and UIs. n The advances of Internet transcoding and multimedia transformation. n The emergence of widgets and widget runtimes as efficient solutions for easy content discovery. n Deep integration of Web services with the device capabilities and features to enable the creation of contextual applications.

15

MobIlE cloud coMputIng wIll ShIft applIcatIonS dEvElopMEnt to thE wEb

the enterprise market. In addition, the migration to a Web development environment could increase traffic around hosted services such as e-mail, VoIP, online office, calendar, online gaming and social networking. Several device vendors have been pre-installing key widgets in their devices but the trend now is to reorient their software platform strategies towards the creation of widget ecosystems for the development, distribution, lifecycle management, discoverability and monetization of widgets and Web applications in general. These applications are generally easy to create, fast to distribute and serve a plethora of niche markets on the Internet. Tier-1 operators are also realizing the potential of partnering with Web application developers to enable innovation over their networks, reduce costs related to building data services and build service plans around the long tail of consumer applications that target different user groups. The aim of major operators is to move away from pipe services based on flat rates towards the creation of content-based service plans that will enable them to address different consumer groups with relevant real-time contextual applications and services. Operators that are not experts in mobile data services, notably Mobile 2.0, have now openly admitted that they will not be able to create these services on their own and expect to employ third parties in the value chain to create best-of-breed services with sustainable business models. In this context, vendors of mobile widget solutions could facilitate the work of operators by enabling them to bridge the gap between the Web and mobile applications development. These vendors already propose a suite of applications that could include a widget player, idle screen replacement, ODP and a white-label application store. These products could be deployed either individually or as part of an end-to-end widget development, distribution, presentation and monetization ecosystem. Informas research report Mobile Web Applications Development looks at various solutions for developing Web applications and widgets, their respective deployment scenarios and the different features that could be requested by operators or OEMs that wish to add mobile Internet and branded services through widgets. Obviously, operators and OEMs have different requirements when choosing a mobile widget solution depending on which market segments and regions they want to address and which services they aim to deploy. The report also looks at the role of mobile widgets in providing a rich mobile Internet experience to help operators and OEMs create new service opportunities, increase customer loyalty and extend the value of their brand to new market segments. It includes a comprehensive and detailed analysis of the revenue opportunities and key trends in widget ecosystems, enabling technologies and the challenges facing operators and OEMs in implementing them. This analysis has been taken from the Intelligence Centre, for more information about the service please visit: www.intelligencecentre.net/mobile-handsetsdevices/

16

furthEr rESourcES

Across the 10 channels of the Intelligence Centre, clients have access to over 9,000 pieces of analysis, over 500 data and forecast spreadsheets, over 3,000 conference papers and over 21,000 comments. In addition, the service features over 200 individual country profiles and over 1000 company profiles, all of which are updated on a regular basis. Here is just a selection of further content related to mobile Internet:

Analysis

n Mobile-specific Internet content (made-for-mobile) n Web apps as an extension of the mobile Internet n Developers favour newcomers over more established

Data & Forecasts

n Mobile Devices Smartphone & OS Forecasts,

20092014
n Mobile Internet Forecasts, 20092014 n Mobile Content Multimedia Handset Launches n Mobile Content Service & Applications

smartphone platforms
n Game-changer iPhone has not completely overturned

the old order in mobile games

n Mobile Web runtime (MWRT) opportunities and

Announcements Tracker, end-1Q10

n Mobile social networking forecasts, 20092013 n Mobile internet forecasts, 20092014 n Mobile devices market size and segmentation,

challenges
n Market dynamics of mobile widgets: native vs.

Web-based technologies
n Sun Microsystems strategy for the mobile widget

20092014
n Global mobile broadband and mobile subscriber

ecosystem
n Future outlook and technology trends in mobile

forecasts, 20092014
n Mobile content and services interactive forecasting

widget ecosystems
n Different scenarios for deploying mobile widget

tool, 20092014

solutions
n Key themes from the 2010 Mobile World Congress

for mobile content and applications

n Operators WAC more Wishful thinking in the

Applications Combat? To find out more about how the Intelligence Centre can help your decision making visit: www.intelligencecentre.net/mobile-content-applications/ or contact us today.

17 Informa Telecoms & Media 2010

We track market developments on a global scale

LTE Deployment Plans Operator Netcom TeliaSonera Sweden Metro PCS Net4Mobility (Tele2 Sweden, Telenor Sweden) NTT DoCoMo Verizon Wireless Country Norway Sweden US Japan US US LTE Spectrum Band (MHz) 2600 2600 700 900, 2600 2100 700 LTE Launch or Planned Launch Date Dec 09 Dec 09 Dec 10 Dec 10 Dec 10 Dec 10

The vast majority of operators will watch early LTE deployments with great interest before finalizing their own launch plans. The operators planning to launch LTE in 2010 include heavyweights such as Verizon Wireless in the US and Japans NTT DoCoMo, and smaller players such as US regional operator MetroPCS. Of course, TeliaSonera has already managed to launch the worlds first limited LTE commercial services in Sweden and Norway in December 2009. Motivation for launching early naturally varies. Verizon is suffering from competition from HSPA operators, and has decided to leapfrog to LTE to move ahead of the competition, while NTT DoCoMo already has over 90% of total subscriptions on WCDMA/HSPA, one of the highest proportions of 3G versus 2G subscribers of any operator, and so has more potential demand for next-generation services based on LTE. One interesting aspect of the early deployments forecast for 2010 is that they are planned in many different frequency bands ranging from 700MHz in the US to 2.6GHz in Sweden and Norway. This will create challenges for device makers, which will have to pick which frequencies to support in early devices, as well as operators, which will have to wait for devices supporting multiple frequencies before offering widespread LTE roaming. Thomas Wehmeier, Principal Analyst & WCIS Product Manager

Keeping the worlds leading cellular organisations better informed. World Cellular Information Service (WCIS) combines intelligently sourced primary data from the leading mobile industry players with reliable forecasts and an unrivalled analyst support service. We have close relationships with the leading operators, vendors and regulators globally and we have a dedicated team of forecasters, ensuring that your decisions are underpinned by only the most up-to-date and accurate market data, forecasts and KPIs.

www.wcisdata.com

Informa Telecoms & Media has been serving the industry for over 25 years. We have 65 analysts across every continent, all experts in the collection, interpretation and analysis of primary data. Our clients enjoy direct contact with the analyst team to support their day-to-day decision making. With research offices in nine countries and a dedicated forecasting team, we can provide Entel with regional and country level analysis and data across devices, networks, content and services. This unique approach allows us to work in partnership with our clients on both their global and local strategies. Our analysis, data and forecasts are delivered through our three core intelligence services:

24/7 access to business-critical insight, analysis and data. The Intelligence Centre is a focused online business tool for those in and serving the telecoms and media industries. It features all of our expert analysis, briefings, data and forecasts on topics, countries and companies as soon as it is available. The Intelligence Centre includes 10 focused channels, each one providing in-depth primary and secondary research aimed at helping you make better business decisions. www.intelligencecentre.net

Cutting edge information on all fixed line, cable and broadband markets. World Broadband Information Service (WBIS) is the industrys leading source of broadband, multichannel TV and fixedline market data. As well as access to a comprehensive, reliable and detailed global database of historic market data, KPIs and forecasts, clients also receive unlimited access to a team of dedicated analysts. The data supplied by WBIS, as well as the online tools and analyst support help you make those important strategic and tactical decisions. www.wbisdata.com

Keeping the worlds leading cellular organisations better informed. World Cellular Information Service (WCIS) combines intelligently sourced primary data from the leading mobile industry players with reliable forecasts and an unrivalled analyst support service. We have close relationships with the leading operators, vendors and regulators globally and we have a dedicated team of forecasters, ensuring that your decisions are underpinned by only the most up-to-date and accurate market data, forecasts and KPIs. www.wcisdata.com

To discuss how our unique market intelligence services and expert analysts can support Entel, please contact one of our team:

Europe North America Latin & Central America Asia

Ajay Sule Nathan Knight Marco Esposito Giovanni Cerrini

+44 (0)20 701 74994 +1 415 307 1938 +44 (0)20 701 75853 +65 6835 5158 +971 4 407 2667 +44 (0)20 701 74823

ajay.sule@informa.com nathan.knight@informa.com marco.esposito@informa.com giovanni.cerrini@informa.com iyassu.soquar@informa.com rysio.pakula@informa.com

Middle East & North Africa Giovanni Cerrini Sub-Saharan Africa Rysio Pakula

Join us on LinkedIn: www.informatm.com/linkedin

Follow us on Twitter: www.twitter.com/informatm

Subscribe to our Connect email: www.informatm.com/linkedin

Email us: marketing.enquiries@informa.com

Our analysts have produced four reports on key themes for Entel

research.informatm.com/Entel