CES Preview day was all about hardware, but day 1 was all about filling that hardware with new and innovative content.

1. Extending TV content to mobile devices. This is perhaps one of the most compelling trends expected to proliferate in 2011. Verizon and Time Warner shared the stage to discuss the evolution of TV Everywhere. Dish Network will further extend its Sling Media ability by allowing subscribers to access their live and recorded content on Android devices. The extension of pay TV content to the mobile device will surely complicate the mobile media market in the US by offering an already paid for alternative to mobile specific solutions such as Primetime2Go or even iTunes.

2. Mobile Media continues to grow up. First, Hulu Plus announced it would be available on Android devices soon. This brings Android on par with iPhone but the long lag between the Hulu Plus Beta launch in August and the eventual release of Hulu Plus on Android shows that content owners clearly see iPhone as the premier platform for now. Finding a way to fuse digital and physical, Ultraviolet continued to discuss its development in making accessing owned content more convenient through a digital locker and embedding the technology in as many devices as possible. For more information about Ultraviolet read my Fierce Wireless article. The goal of both services is to increase consumption and with ever larger screens on handsets and the tablet incursion of 2011 these services will find a waiting audience.

3. Video is key to 2011 and beyond. As LTE launches, new video services become available, and phones offering more multimedia-centric features 2011 is sure to be the year of mobile video. But video is about more than just professional content. It also encompasses video conferencing. Recognizing this opportunity, Skype acquired Qik, a provider of mobile video software and services that enable individuals to capture, instantly share and preserve great moments on video from anywhere. This will surely help Skype better compete with other video conferencing services.

What is evident from these announcements is that content owners see mobile as the next big opportunity as well as a necessary outlet for ecosystem building. How networks will handle the load associated with all this video remains to be seen as most popular applications today – broadly speaking – are light on network usage compared to video streaming apps. But its clear that 2011 will be the year of mobile video.

CES 2011 is nearly upon us and the conference will unveil to the public innovations that will shape the year. So, as press day hits its stride it's evident that there are a few key themes in mobile media we can expect throughout the conference and 2011. One key phrase to sum up the events thus far; thinner, faster (both device and network), and bigger (Which is not a contradiction with the first adjective). 1. 4G. One of the buzzwords that will be discussed throughout the show and has been said more times today than zealots at a Steve Jobs keynote say ooh and aah. 4G is clearly the future and for a multimedia loving public the ability to stream and download content more quickly will impact their device usage. 2. Thin. Depending on when a handset manufacturer announced their newest flagship handset today they were briefly the "thinnest smartphone on the planet." Peruse a few press releases and this key phrase will unabashedly appear at the top. 3. Fast. The 1.2GHz Qualcomm SnapDragon processor (and its competitors) and dual core variants will begin making their way into handsets this year. For content consumption this will inevitably mean richer applications, more immersive games, and of course HD video consumption/recording/editing. 4. Cross Platform. Whether it be a TV, a tablet, or a car cross platform services are quickly becoming the rage. As OpenFeint discussed at the AT&T developer conference this morning the ability to compete with friends across platform is the future. Also at the AT&T event discussions were had about developing apps for U-Verse that work on various tablets and phones. For users hoping to better immerse themselves in their content, apps, and games this cross platform functionality will change how they view the ecosystem of products they buy and allow for the creation of very compelling apps unlike anything we've seen so far. 5. Bigger. Screen sizes are growing ever larger (Samsung has a 4.5" device coming) and compatibility with third party accessories such as PC docks and HDTVs will turn phones into a hub for media consumption unlike ever before. For users uninterested in consuming content on a 3.5" screen the new options will make media consumption much more compelling and should impact the growth of digital content distribution as well. This is just the beginning of course and if you're interested in hearing more you can follow Strategy Analytics analysts by tracking the hastag #SACES on Twitter or view our intermittent live stream from CES at .

Location based services are all the rage. Just this morning Shopkick announced another partnership – this time with Crate and Barrel. Foursquare recently exceeded 5M users. Gowalla launched its newest update providing an overhauled user experience. Articles on the topic have appeared everywhere, including Fierce Wireless (Warning shameless self promotion at the last link). But despite the hype location based applications are still just at the larval stage.

Today, stalwarts remain the key players. Recently, we revamped our Apps Database – which used to contain the top ten apps for iPhone and Blackberry in the US. Our new iPhone database contains a more global view - capturing the top 100 (free, paid and grossing) apps - in 62 countries. The data shows that Facebook remains the dominant player – regardless of region. Out of 124 free apps lists (2 weeks of 62 countries) Facebook and Skype appeared on 98% of the lists. Windows Messenger appeared on 75% of the lists.

Interest in social networking is not restricted to mature markets either. In fact, the Middle East and Africa are most likely to download social networking services - with nearly 11% of all free iPhone downloads coming in that category – almost 2x that of Western Europe.

Clearly there is intense interest in social networking even if there is not yet sustained interest in location based social networks. Foursquare and Gowalla combined for 12 total appearances (11 for foursquare and 1 for Gowalla) managing to garner placement on less than 10% of all free apps lists. However, many of the companies, such as McDonalds, that were bold enough to partner with these up and coming companies have found great success as these services continue to slowly grow, expand, and increase their influence.

In fact, these services will be so important in 2011 that we dedicated an entire prediction about them in our recent report 11 for '11: Predictions on the Future of Mobile Media (although to know what we predicted you’ll need to read the report). Additionally, we will be hosting a webinar on Thursday December 17, 2010 at 10:00 EST to discuss the future of social networking and how location will come to play an increasingly important role in 2011 and beyond.

Please find more information and register at the link below.

Mobile Social Networking: A Platform For Success?

Angry Birds is a runaway success. It has appeared in the top ten Apple apps for the last 26 weeks. More than 2M copies were downloaded on Android almost immediately. However, Angry Birds is Rovio’s only game. Once everyone who is interested in games has downloaded it, how does a company like that continue to make money? Are they destined to be a “one hit wonder” and disappear after the initial burst of downloads?

The solution seems to be to sell themed applications! The Angry Birds Halloween app is just the beginning of a trend we expect to see more of from developers successful with a single product, as Rovio has already discussed a Christmas themed Angry Birds to be released later this year. It’s unclear if Labor Day, Boxing Day, or Bastille Day will warrant their own themed applications.

The fact that themed applications are launching shouldn’t come as a shock but their release does show us that companies are still testing various strategies.

Instead of leveraging in-app purchasing to sell the themed levels, Rovio sold Angry Birds Halloween as an independent application. This is interesting for a few reasons:

It shows there are some limitations with in-app purchasing. Specifically

1. The audience for the app may be different (or larger) than the original app thus limiting it to those who bought the original limits the audience
2. Having an app appear in the top ten must sell more product than marketing an upgrade in-app by garnering “free” ad space on the list
3. The halo effect could occur introducing new users to the original app.

Lima Sky on the other hand updated their application, Doodle Jump to include a Halloween theme but did not release a new app. This could be for a number of reasons

1. Lima Sky didn’t want to develop an entirely new app
2. Lima Sky felt the boost of Doodle Jump downloads sufficiently met their sales goals

Neither approach was wrong or right but simple present different ways to pitch an app. However, the results seem clear - Angry Birds Halloween sits atop the iTunes US Top Ten app list on 10/28/2010 while Doodle Jump is in eighth. The original Angry Birds is second. Now, Angry Birds is inherently more popular so it’s not a clear cut victory but the numbers don’t lie. It is now reported Rovio has sold more than 1M copies of Angry Birds Halloween netting nearly $700,000 in the process.

What this means is that other successful developers may in fact follow Rovio’s lead in the future. A holiday edition of Skee-Ball might include rolling pumpkins or Christmas ornaments. And as these successful developers crowd the top ten with multiple applications they will reduce the space available for new developers. Combine this with Apple not updating the top ten lists during the holidays (Thanksgiving and Christmas) and entrenched developers stand to benefit even more as users are exposed to their offerings while emerging players struggle to break into the top ten. This only furthers the notion that enhanced discoverability is key for future app stores and could present an opportunity for other platforms to woo developers.

Words like ‘experimental,’ and ‘niche,’ are often used to describe the status of advertising on mobile phones. However, on 14th October 2010 Google announced that its mobile advertising business is currently operating at a $1 billion annual run rate, which I believe represents a significant milestone and proof point that advertisers are beginning to take mobile advertising much more seriously. Strategy Analytics estimates that globally advertiser spending on mobile will reach over $6.9 billion in 2010, which we estimate would give Google a 15% share of the total mobile advertising market. This compares to Google’s 35% share of the total digital advertising market. We are not surprised that Google’s share in mobile advertising is lower than its total digital share given that mobile advertising is more fragmented than the online advertising market. Our advertising estimates are built on assumptions about growing mobile media usage and the average price that advertisers pay media owners to display their adverts within their properties. Indeed, Google has confirmed this growth in usage is fuelling the rise in its mobile advertising revenue - the company claims that search queries conducted by mobile handsets has increased by 500% over the past two years, with search queries from Android devices playing a role in that growth. Search requests from Android phones increased 300% in 1H 2010. This evidence of improving usage will also have a positive impact on advertisers’ attitude towards allocating their budgets to mobile, with companies like Google, Apple, Microsoft, AOL, and Millenial Media positioned to benefit from this shifting sentiment. Although Apple is a one platform pony in the handset market it has shown how successful it can be at exploiting its niche. In June 2010 at its WWDC Apple stated that advertisers had already committed $60 million to its iAd platform. As online advertising networks Microsoft and Yahoo also continue to ramp up activity in mobile advertising, the next big question is – who will follow Google to be the next $1 billion mobile advertising company? Nitesh Patel

At CTIA in San Francisco last week, away from the fanfare around LTE rollouts and the next dozen tablet devices (ok, I exaggerate a little), Sprint had an announcement which will have significantly higher impact on mobile broadband adoption and revenues: Sprint ID. 

Sprint ID promises to up the ante on personalization and ease current feature phone users into the smart phone ranks.

Sprint ID offers instant personalization along key themes/packs where the operator has done the heavy lifting of identifying and group related applications of interest to different persona from wallpaper to ringtones to apps. While the one click marketing line is not quite matched by reality given pesky little things like accepting terms and conditions etc, Sprint ID is a significant breakthrough in my opinion as:

• it broadens the market appeal of Smart phones to current feature phones users with a simple to understand offer in a range of device price points including the critical $49 and $99 levels.
• it tackles one of the biggest weakness of all app stores: discoverability of content and simple personalization.

Three handsets were featured at launch of Sprint ID: Sanyo Zio™, Samsung Transform™, LG Optimus S™. These three devices cover key price points in the Sprint portfolio and provide customers with a range of form factors, industrial design and brand to meet their tastes. Interesting to note that both LG and Sanyo retain the right to put their own packs on their handsets as well. This is a big win for LG as its Optimus S™ will be available for under $50 with contract giving the vendor a much needed boost in the smartphone space. Samsung meanwhile continues to shine at Sprint occupying the lucrative $149 spot with its Transform™. All three devices of course require a Sprint Everything Data plan.

However, for me the more significant impact is that operators and oems are finally realizing that customers don’t buy phones or services or apps… what they really want are positive experiences

… be that socially connected, sports, education, health and fitness, fashion etc. This is something that our User Experience team has been evangelizing for the last 7+ years. Whether its 80k apps on Android or 250k on Apple store or 10K on RIM, one common experience has been exasperation at the huge waste of time, energy and emotions in finding ANYTHING!!! Which happens first, eyes glazing over or fingers cramping with so much scrolling? Either way the net result is often a disappointing experience which the early smart phone coolaid drinkers have learned to live with.

Newbies to the smart phone arena, will certainly have less tolerance and spend less time to personalize their device and enable applications. Sprint ID is well tailored to the next wave who are taking tentative steps into the smart phone space

 

David Kerr

dkerr@strategyanalytics.com

Rumors abound that Qualcomm has cancelled its direct to consumer Flo TV service. Before delving in to the implications of such a decision it is important to note that as of now Qualcomm’s white label service it sells to carrier partners is still intact even if it is next on the chopping block.

Qualcomm’s decision to kill its never commercially viable direct to consumer Flo TV should come as no surprise. Many of the challenges were discussed in a report published in December 2009. The service suffered a number of hurdles to adoption:

1. The cost of FLO TV dedicated hardware
2. The cost of FLO TV service
3. The linear nature of the FLO TV service

The challenge in winning consumers was not unexpected but there are important lessons that carriers can take from Qualcomm’s inability to drive market demand for mobile broadcast TV services if they in fact plan to continue offering mobile broadcast services and most of these challenges are the same as Qualcomm faced in their direct to consumer play.

1. The cost of mobile TV enabled phones. Of the 4 AT&T phones that offer mobile TV service (mostly featurephones with touchscreens) only one is free while the others range in price from $49.99 - $149.99. Compare this to the 20+ free phones available to consumers and the reasons users may opt against mobile TV enabled phones are clear. As smartphones continue to gain momentum in established markets feature phones are attractive to a more communication/cost-centric audience. Therefore an increase in hardware cost to the carrier must translate to an increased cost to the end user. Therefore the increased cost of hardware featuring mobile TV makes the devices less attractive.
2. The cost of the service. Despite carriers testing various models – such as giving away broadcast channels for free or offering free service for a few months – the price of the service remains too high for the value it offers. If in fact the type of user opting for a feature phone is not multimedia inclined even then even a nominal fee – in this case $10 which is more than nominal – could be enough to scare away potential subscribers.
3. The demand for linear TV services. This will always be an issue for Flo services and in the increasingly on-demand world full of alternative video options paid mobile linear services simply don’t make sense for users.

In countries – such as South Korea – where most phones have mobile broadcast chipsets combined with free robust services adoption can even be deemed modest successes and the revenue for content owners in such a scenario remains unclear. But it does so only because it is free. Just because Qualcomm is retreating from the direct to consumer space doesn’t necessarily mean its white label service will also be a failure. One potential albeit unlikely side effect carrier should be wary of is that Qualcomm’s content partners – recognizing the limited opportunity the market offers combined with the limited success of these services could abandon mobile TV limited the amount of content available.

This only underscores the challenges that carriers in developed regions are facing. In an era where the carrier is becoming increasingly marginalized for phone services they must decide where to invest and right now that investment in both development, marketing should be behind their own branded app stores.

Qualcomm on the other hand should decide what other services the FLO spectrum can be used for. One opportunity regularly touted was aftermarket accessories for smartphones that could receive Flo broadcasts – but that too would have inevitably failed so now Qualcomm must go back to the drawing board. After spending a reported billion dollars on FLO technology and spectrum it may be worth Qualcomm considering licensing the spectrum for some other use..

September 23, 2010

While there has understandably been a lot of attention given to consumer apps post iPhone and the plethora of application stores that have emerged, business mobility and enterprise mobility offer huge potential from horizontal to vertical applications and from smartphones to iPads and tablets to superphones.

In both NA and W. Europe, business customers account for under 30% of users but are the dominant streams of both revenue and profits for operators. On the device side, premium priced models from RIM, Nokia, and Microsoft Mobile licensees as well as the iPhone have long been key drivers of profits in a market where low single digit margins are the norm.  The explosion of smartphone choices has led to the battle ground moving beyond the corner office, to other executive and now increasingly the midlevel manager.

With a new range of devices competing for space in the corporate market, the issue of corporate versus individual liable has become an increasing priority for IT decision makers. Add on the complexity of managing an expanding list of OS (Android, iPhone, Windows Mobile, Symbian, Palm, MeeGo, Bada from Samsung) and the growing importance of mobile portable devices with access behind the firewall and one can already feel a corporate migraine forming…. And that’s before we even discuss device management, mobility policy, device retirement etc. etc.

I am looking forward to CTIA Fall (San Francisco October 5-7) and in particular to the Enterprise Mobility Boot Camp moderated by Philippe Winthrop of the Enterprise Mobility Foundation. The boot camp spread over two days will address many of the issue listed above with our own Andy Brown featured in an analyst roundtable on October 6^th.  I look forward to meeting you there. Don’t hesitate to contact Philippe for passes to this the deep dive enterprise mobility event.

David Kerr

David Kerr
Snr. VP - Global Wireless Practice
Tel: +1 617 614 0720
Mob: +1 262 271 8974

One message I've consistently been hearing from Nokia over the last two years has been that all of the different Ovi services will somehow combine together to make something wonderful that would "delight users" (their words). Nokia never gave any concrete examples, and I was starting to think that this was simply vaporware - but now that all the services are together and under the same Ovi banner, there is some magic starting to happen. The Nokia Gig Finder application genuinely impressed me at this year's Nokia World. The premise is simple - but then aren't all the best ideas? The Gig Finder app looks at the music you have on your phone, checks your location, and then suggests up-coming gigs for you. You can buy tickets directly, message your friends about it, save the gig on your calendar, get directions to the gig and listen to some more music from the artist to get you in the mood for the gig as well!. Music, Maps, Billing, Messaging, Social Networking and the phone's Calendar all coming together - which sounds like it should be far too complex for the user but in fact the app is remarkably simple and intuitive. All of the technical stuff is hidden and it is the complex integration of services at the back-end and the single sign-in (which has taken Nokia over a year to achieve across its Ovi suite) which makes this sort of stuff possible. An interesting, innovative, compelling, useful app which is greater than the sum of its parts - and with a developer community numbering over 3 million, I'm hoping to see more innovation like this emerging out of the Nokia ecosystem. As Thomas Edison said, "genius is 1% inspiration and 99% perspiration". After the years of talk, they needed something to prove there can be an end product. I'm sure there has been plenty of perspiration behind the scenes at Nokia as they rolled out and integrated these services, at last that 1% inspiration is starting to show. Related reports: Nokia Opens Up To Innovation - David MacQueen

Dennis Crowley – Founder of Foursquare - may be right. Facebook Places is indeed boring. However, anyone – Crowley included -that thinks Facebook Places in its current iteration is the final step for Facebook into the location based social networking space is kidding themselves. Facebook Places will have long term ramifications on the location based social networking space in due time but for now there are more questions than answers:

· Will users be able to check in their friends on third party sites even if they are not members of that service?

· Fragmentation of various services still exist making checking in to Brightkite, Foursquare, Gowalla, and others time consuming. FB may allow for dual service check-in (ie. Foursquare and FB or Gowalla and FB but not all three).

· Will FB users find enough usefulness in third party networks to utilize them or will their growth be stunted?

The question about competition comes down to Facebook’s ambitions which is a desire to drive revenue through the creation of a comprehensive ad network. Places will allow FB to acquire more information on users, increase the frequency of user interaction with Facebook, and better understand the nature of relationships between individual users. This type of data is important and integral to advertising not only via mobile but also on the web. If Facebook knows who a user spends time with it creates compelling new advertising opportunities. Let alone knowing where people go. How frequently they are there. The intelligence and effectiveness of Facebook’s advertising platform could come to rival and quickly exceed that of Google.

Partnering with others gives FB a way to appease the market in the short term by not appearing anti-competitive but Places will thwart competitor’s long term growth. Even if it helps them in the short term by bringing awareness to the services. But think about this – if just 1% of Facebook users regularly uses Places – Facebook will have more than 5M users – double that of Foursquare. And 1% of users would be a failure by Facebook’s standards.

For now, competition can continue to abound as competitors will have the opportunity to differentiate. Foursquare can continue to offer mayorships and enticements. Gowalla can offer trips, pins, and other prizes. But in the long term - competitive services - will have to move well beyond the check-in in order to grow beyond their current user base. Booyah’s MyTown is an excellent example of how to accomplish this – by turning location – into a game.

The immediate effect will be on weaker competitors who don’t have the resources or the buzz to convince new users to sign up. Some of these services will likely wither away before the end of 2010 as others see growth stunted and plan exit strategies for 2011. A select few may continue to press on, but Facebook will be the biggest game in town by then. And with scale comes sponsors, advertisers, new business models, etc.

Competitors aren’t the only long term losers either as carriers – hoping smaller third party services – would emerge as a viable new revenue stream from local advertising may miss the boat as subscribers instead opt for Facebook’s service which is unlikely to share revenue with carrier partners.