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 .

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..

 

As guest speakers David Kerr and I have just returned from the the inaugural Metaplaces location based services conference in San Jose 22nd-23rd September 2009. The event was attended by companies across the LBS value-chain. Among others, content providers such as Inrix, USA Today, WCities; Digital mapping companies Tele Atlas, Navteq, Waze, Open Streetmap; LBS application publishers uLocate, Wavemarket, Loopt, Google; LBS solution vendors Openwave, Sense Networks, 1020 Placecast, and Qualcomm. Notably, there was an absence of operators and advertisers, with only US carrier MetroPCS and Publicis representing respectively. The fact that so few carriers were in attendance underlines why they are losing their position in LBS, yes pun intended sadly, and suggests that LBS remains off their list of priorities.  

The three main standouts for this event for us were:

1. Waze: We were most impressed by the social digital mapping company Waze, who proclaimed it has recently expanded its application to Symbian and Windows Mobile platforms, and has just reached a critical mass of 160,000 users in Israel. Waze offers a free turn-by-turn (TBT) navigation application based on digitized census map data. This basic map is being constantly improved by a community of users whom allow their handsets to be tracked as they drive. Further user participation involves users actively annotating details to the map (e.g. notifying Waze of new roads, new one-way signs and changes to traffic flows, etc within the application). Making the process of user feedback as pain free as possible is clearly imperative to enhance participation levels. Overall, the model relies on an appealing trade off. Firstly, the user gets a free TBT application, and their incentive to improve the map and offer information is that their free TBT application will improve further in quality. Secondly, the benefit for Waze is rather than invest billions of dollars to collect map data, a la Nokia, its community is doing so on its behalf. According to Waze 1% of cellular users per market is sufficient. Armed with an improving digital map Waze can to some extent compete with TeleAtlas and Navteq in licensing of digital map data. Everyone is a winner, and although the quality of the maps are unlikely to compete with Tele Atlas or Navteq, the success of Wikipedia underlines the potential of user or community generated content.   
2. Uncertainty around monetization: We were looking forward hearing case studies about how companies had started to use location data to make money - the tag line for the event was 'How to Monetize Location Data & Services,' so can you blame us? Despite numerous innovative ideas about how location can be used, it is clear that most players in the LBS industry are still trying to figure out what business models will prevail, and many are pinning their hopes on advertising. There's little disputing that user location data can improve ad targeting if cleverly combined with other relevant data about the consumer. However, Sense Networks claims to have gone a step further. Its analytical tools allow it to categorize cellular users into classic (and not so classic) consumer segments based on tracking their movements over the course of a few months. This solution clearly addresses the problem that carriers have collecting data about their prepaid customer bases, and kills two birds with one stone. Firstly, carriers with large prepaid subscriber bases (in markets like Italy and many emerging markets) can learn more about their customers and adjust their own service marketing accordingly. Secondly, carriers with ambitions of becoming a smart pipe are in a stronger position to provide consumer targeting information to advertisers. Oh yes, as you'd expect, discussion about privacy implications was a key feature during the entire conference.      
3. US carrier bottleneck: US operators remain a bottle neck to location based service availability. While owners of smartphones integrated with GPS are able to use the rising number of location enabled applications that are available through vendor application stores, the majority of non-smartphone users are restricted to the services the carriers make available through their portals. To provide an example of how slowly US operators are moving regional US cellular operator MetroPCS is only just about to make location look ups available to third party applications that are distributed through its portal. It is yet to consider opening up user look ups on a wholesale basis. While US operators continue to guard the location data of their customers, carriers will continue to fall behind and LBS innovation will continue without them.

While innovation continues in the LBS sector, mainly outside the carrier channel, the unanswered question remains - where is the money?