OEM and third-party messaging applications such as Blackberry Messenger (BBM) and WhatsApp are clearly gaining traction on smartphones platforms:

• During June 2011 RIM announced 32m active BBM users growing at a healthy rate of 2 m users per month and generating billions of messages each month.
• The popularity of WhatsApp in the Netherlands has started to negatively impact (-8%) SMS volumes among KPN’s Hi Brand customers, as highlighted during in KPN’s overall strategy presentation given in Q2 2011.

RCS-e, a watered down version of RCS, which essentially excludes the mandate for operators to include presence information as part of the service, will allow operators to compete with OEM and third-party IM clients by enabling operators to offer IM/ chat services. These services will work out-of-the-box for enabled smart and feature phones and allow users to view who else has similar chat capability via their phone book. Take a look at the following video from Vodafone to see how RCS-e services will work.

However, while the launch of RCS-e services is clearly the right move, in my opinion operators will face two big challenges in driving its adoption:

Late to the party: With leading operator groups Orange, T-Mobile, and Vodafone aiming to launch RCS-e based chat in key European markets before end of 2011/ from 2012, OEM based messaging services like RIM’s BBM and Apple’s iMessenger have already gained significant traction.

Not enough fire power: Third party IM/ chat services provide more functionality than RCS-e. Services like WhatsApp allow users to share their location and set presence information. While these elements are on the RCS roadmap operators must move quickly to add this functionality in order to remain relevant in mobile chat.

Furthermore, operators will need to carefully position and price these chat services. On one hand RCS-e will compete against IM/chat services that are perceived as ‘free,’ so operators will be under pressure to price accordingly. On the other hand carriers will not want to kill off the SMS cash cow which has served so well for so long. A bundled approach, in which operators include unlimited IM/ chat as part of a broader messaging suite which includes SMS, will allow operators to achieve both aims – maintaining the premium for SMS while appearing to offer greater value by providing free instant messaging. However, as with MMS and video calling you can never rule out carriers attempting to charge a premium – which will inevitably choke service demand!

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

 

 

 

The inevitable movement to tiered pricing which started with Verizon Wireless acknowledging its plans to do so for LTE and has been accelerated with the much anticipated data plan announcement by AT&T this week.  So, what next?

• Will we see significant priced based competition for mobile data among the top US operators?
• Will we see significant movement in share of adds for AT&T as iPhone wannabees are tempted by a plan of only $15?
• What impact will lower data plans for smartphones have on AT&T’s Quick Messaging Devices and Verizon Wireless equivalent?
• How long before we see family data plans and shared usage across multiple devices?

The move by AT&T is a smart play to extend the smartphone momentum as the low hanging fruit of Apple aficionados, multimedia techies and style seekers willing to pay top dollar has been significantly penetrated.

There is no doubt that the iPhone remains the coolest device on the marketplace and the end to end user experience remains easily the best in class. So, reducing the TCO to attract the next 20% of customers to a paid data plans while educating customers about data usage levels and managing the traffic risk is very smart business in my opinion.

The lower price points will help AT&T maintain its current leading share of smartphone users and may be attractive to casual social networkers

• Although the 50 photos allowance is not exactly generous! For casual messenger, and social network status checking and moderate email the new DataPlus plan is quite attractive overall and will likely attract a portion of customers who would otherwise opt for a Quick Messaging Device from AT&T or a competitive offering from Verizon Wireless.

I do expect to see some modest price competition among the big operators

• with T-Mobile most likely to drive prices lower given their need for scale and to protect their predominantly youth centric customer base. but also expect an increasingly strong Verizon Wireless handset line up to compete strongly.

The impact on Quick Messaging Devices is in my opinion likely to be modest

• as a traditional qwerty remains overwhelmingly the input of choice for heavy messengers in the US although there is definitely room for lowering the $10 mandatory data plan on featurephones

Family data plans and data plans which allow access across multiple devices are in the pipeline

• but will probably not make an appearance until 2012+ as part of LTE offerings.

From a device vendor perspective, the move to lower priced iPhone plans is likely to put further pressure on vendors like LG who have yet to make a credible offer in this space as well as RIM who will find more competition in the consumer space.

The lower pricing on data plans will be music to the ears of ambitious new entrants like Huawei, ZTE who plan to bring mass market priced devices to the US & Europe. The lower TCO of smartphones as a result of downward pressure on service prices boost their addressable market.

Forecasting can be a tricky business. Every so often, a truly paradigm shifting event occurs that requires a wholesale re-think of how emerging markets will develop. Such is the case with Facebook Zero – a stripped down version (no pictures, videos, etc.) of the social network offered to non-data subscribers in emerging markets for free at 0.facebook.com.

It has been reported, and our newly updated draft social networking forecast (to be published in July) confirms that about half of all page views on the mobile web are social networking related. Facebook Zero should tip the balance further in favor of social networking in emerging markets.

The impact of the 50 carrier, globally supported Facebook Zero will be huge for users, carriers, and competitors.

1. Locking users in. Using its size, Facebook has been able to negotiate deals with carriers that other social networks or start-ups will not be able to rival. As individuals, their friends, and their families sign up for the free service the network effect will take hold and position Facebook as the de facto social network.

2. Reach. According to Strategy Analytics’ Global Smartphone Sales Forecast by Country: Asia Pacific & Emerging Markets and the Worldwide Cellular User Forecasts, 2010-2015, the number of mobile users in India in 2009 was 389.9m with just under 6 million smartphone owners or 1.5% of the mobile population using a smartphone. While not all these non-smartphones millions more users will have access to Facebook now than in the past expanding Facebook’s reach exponentially. And India is just one of the dozens of countries being deployed to (see chart below for the rest).

3. Advertising. A key revenue driver will be advertising. Facebook will have a sticky user that relies exclusively on its service to share personal information and location data which is necessary for targeted advertising to hundreds of millions of users in emerging markets. However, if carriers are not sharing in the revenue opportunity they risk missing out on the more than $7b in browsing revenue associated with social networking in 2010, according to the Global Mobile Social Networking Forecast 2006-2013.

4. Data Upgrades. While many users in emerging regions may not be prepared to sign up for data services yet, enticing users by showing what the mobile web offers with a stripped down version of Facebook could be a sufficient appetizer to winning their business in the future.

5. Boxes out competitors. The very hot mobile social networking space, which we have analyzed Here, Here, and Here will be owned by Facebook in emerging markets if Facebook can effectively roll out its geo-location it has touted. Facebook has just went from the 800lb gorilla in mature markets to the 2 ton gorilla

The service is also important for Facebook which has recently been banned in Pakistan and faces competition from feature phone staple – text messaging which serves as a crude social network in some emerging regions. What this means for partners – be it carriers, content owners, advertising networks, or others – is that Facebook is the partner companies will need to work with to immediately reach into emerging markets.