With MWC now well and truly over our post mortem can begin. With so much activity going on, the Insight, called "Mobile Money, Location Based Services, & HTML5 Shine at MMW 2013," from the Wireless Media Strategies team focuses on a handful of key non-device related industry announcements and initiatives which were unveiled at MWC 2013:

• We put Samsung’s global alliance with VISA into context – what does it mean for Samsung’s operator partners and for Google, both of which aim to offer competing NFC payment services?
• How is Nokia executing on its strategy to grow HERE as a horizontal platform spanning competitor WP8 devices and other operating systems (OSs)? 
• The new OpenAPI Exchange initiatives from the GSMA – will it breathe new life into operator ambitions to participate in the evolving apps space, or is it too little too late?
• The growing support behind Mozilla FireFox OS provides a welcome boost to the HTML5 apps ecosystem, but is it sufficient to overcome some of the inherent challenges facing the technology?

This Insight compliments the webinar and daily MWC blogs published by Strategy Analytics' devices team.

Nitesh Patel

Mobile operators like to talk about the wealth of information they have about the users on their networks. Brian Smith, director of Product Development at Sprint termed this data as "crude oil" in an m-commerce webinar I co-presented.

Operators have access to demographic and behavioural data of postpaid customers, including gender, age, and address for the former. For the latter operators know the location of customers each time their phone interacts with the network, call records for which numbers and locations they call or text, and how actively the user engages in data services. Prior to the rise of smartphones and OS controlled browsers, operators also had a clear view of which mobile sites most of its users were accessing.

Much of this customer information has been used by astute operators to understand customers and to provide appropriate levels of service. It has also helped smarter operators to target relevant products and services to specific user segments. Collecting the data has never been a problem. The main challenge remains aggregating, refining and analysing relevant data from separate silos across its business so that the information is useful.

On 9th October 2012 Telefónica announced the launch of a new division, Telefónica Dynamic Insights, which aims to sell anonymous data about its customer base to third parties. “Smart Steps” is intended to be the division’s initial product. It is aimed at retailers and will provide “heat maps” of its users on a real time basis through the day. Leveraging GFK’s retailer relationships clearly makes sense as the division reaches out to new customer segments.

It’s refreshing to see Telefónica moving forward with ambitions to become more than a smarter pipe, particularly as operators need to expand revenue streams in order to mitigate the decline of the core communications businesses. However, even if the crude oil can be refined some key questions need to be answered before the real value provided by the Dynamic Insights division can be assessed:

• Who will be the main customers for that information? Retailers are the clear target for Smart Step, but what other data sets will emerge, and how long is the tail for this type of analysis? In future I suspect we will see products built around profiles of customers, the types of devices users own, the services they use and users’ data usage patterns, among others.
• How attractive is customer data from a single operator to potential buyers? On 11th October Telefónica acknowledged the need to extend its operator billing efforts to other operators by announcing Telenor would make its billing APIs available to BlueVia. Customer analytics clearly needs to also open up beyond the single carrier in a country, even if it does have a global footprint.
• Competition and fragmentation risks? Competing operators ma y follow with similar products and partner with other providers of consumer information, such as Experian and Springboard, leading to fragmentation and complexity for buyers.
• Is operator location accuracy sufficient to provide true value to those customers? Momentum is clearly growing behind improved data granularity and indoor location, as highlighted by the formation of the Accurate Mobile Indoor Positioning Industry in August 2012. Initiative such as the Zonal Presence Service, created by the Small Cell Forum, and supported by Aepona starts to become more relevant for operators to address the accuracy gap.

The recent focus on maps and location services in the media has centred on Apple’s botched first attempt to offer its own map service riddled with errors.  However, we want to highlight the successes occurring in the background such as Nokia’s continued building towards its ambition to become the leading “where” platform in advertising, automotive and enterprise markets.

Nokia’s Location & Commerce (L&C) unit remains one of the brighter spots for company. Despite being loss making, the L&C unit increased its revenue 25% to €1 B in 2011. Based on its performance during 1H 2012, the division looks set to grow revenue by more than 10% in 2012.  Nokia L&C accounted for just below 3% of Nokia’s total revenue in 2011, against a backdrop of falling sales in its core handset business. With Nokia doubling down its investment in key strategic areas including location, investors need evidence of where and how L&C will grow its revenue in the future. A combination of recent announcements helps shed some light on its L&C business as a growth area:   

Advertising & Marketing: Nokia has partnered with Groupon to deliver local targeted offers via Nokia Maps. We expect Nokia to take a share of the advertising revenue by providing Groupon with access to Nokia Map users on Nokia devices. In order to maximise the advertising revenue potential (for Groupon and Nokia) it makes sense for the Groupon integration to be extended to other WP8 licensees like HTC and Samsung, which we expect to be next steps.      

Automotive: At the Pairs auto show Nokia announced extensions of existing relationships with major automotive players BMW, Mercedes, Volkswagen, Hyundai, Pioneer and Garmin. These deals not only enable Nokia to maintain existing licensing revenue with these vendors but to also increase the licensing opportunity through provision of ADAS related content.

Enterprise apps: Just this week, Nokia announced that Oracle had created a link between its Nokia Location Platform (NLP) web service and Oracle’s Fusion Middleware MapViewer. Nokia is currently the only provider of both map data and online mapping services that are integrated with Oracle products. This new integration is intended to reduce the complexity and cost for customers to integrate map content into business applications, and should see Nokia move up the Oracle enterprise value-chain.

With respect to the use of business location information, many enterprise apps contain information about customers or assets such as fleet vehicles that is connected to specific geographic locations.  Having access to up-to-date location information is necessary for business users to do their work.  The value of having this information mapped visually within the worker’s business applications can range from moderate to extreme.  In industries such as transportation, energy/mining, facilities management etc. the ease and speed of use and the level of detail that can be provide by visual maps are essential.  In other industries such as finance and healthcare, visual mapping of customer and other sites is useful but not critical.

As access to and use of location information becomes easier and less costly due to advances like the ones listed above, more consumers and business users will benefit from the rich maps that will pop up in lots of new and exciting places.  This bodes well for Nokia’s strategy to double its investment in location and commerce to pursue growth across all segments.  

Nitesh Patel & Mark Levitt

Over the last 12 month Facebook has bolstered its presence in mobile, underlined by its recent acquisitions of photo sharing application providers Instagram and Lightbox, and real time messaging company Beluga.

Furthermore, given Facebook’s rapidly increasing scale and growing use on mobile, the role of Facebook in over-the-top (OTT) messaging should not be ignored by mobile operators, despite the hype around smaller "independent" services such as WhatsApp. WhatsApp has been credited for the demise of KPN’s mobile messaging revenue in the Netherlands.

In our recently published report “Facebook and Messaging: Threat or Opportunity” we address key questions, such as:

• Does Facebook Messenger, along with the core messaging and communication features of the main Facebook app and website, represent a considerable threat to carrier messaging?
• What is Facebook’s scale?
• How is it used by consumers?
• What rich features can carriers, OEMs and others learn from?
• And what’s next for the seemingly ubiquitous and unstoppable social network?

The report also highlights a number of offensive and defensive response strategies for operators in order to combat the growing threat of Facebook, including wholesale partnerships through to evolving carrier messaging services in order to compete.

Today Nokia announced the launch of Nokia Browser 2.0 for its S40 handset range. Among Nokia Browser 2.0 features are:

• Cloud-based adaptation, compression and optimization of internet content to enable more efficient and cost effective browsing experience of users. This capability is clearly the result of its March 2010 acquisition of Novarra.
• The availability of a catalogue of web applications, consisting of 10,000 apps.
• A user friendly browsing experience, including the ability to download web content to the phone or memory card for storage.

Can Nokia’s release of Nokia Brower 2.0 alleviate pressure and gain market share in the entry level device segment where it is facing mounting pressure?

Clearly, Nokia’s cost efficient and faster browsing message will resonate with price sensitive segments with a hunger for accessing the internet. Strategy Analytics predicts the number of cellular users accessing the internet on their mobile phones in developing cellular markets like Argentina, Brazil, China, India, and Mexico to reach 1.4B by 2017.  Furthermore, operators in those markets yet to implement browsing content adaptation in their networks (from vendors such as Openwave (now Openwave Mobility) and Infogin) will view the new browser as more network friendly, which may increase operator demand for S40 handsets. Certainly, operators like RIM’s data-compression technology and this has helped the smartphone vendor to gain traction in markets like Indonesia and South Africa and meeting the needs of operators certainly ties in with Nokia's broader strategy to cosy up to operators.  Beyond browsing the Web Apps catalogue (although currently limited in size to 10,000 apps) goes beyond basic internet access and adds further value to the Nokia Browser 2.0 proposition.

Although these are clearly positive moves and enhance the attractiveness of S40 for operators and customers, I don’t expect the latest announcement to relive Nokia’s woes in this segment for the following reasons:

·         Competition: Device independent solutions are already available in network constrained markets: 

• Opera Mini performs similar cloud based optimization of internet content to Nokia Browser 2.0. Opera Mini has an active monthly base of 160m users globally and traction through operator partners in many emerging markets. E.g. Across its Africa, Middle East and Asia Pacific region Vodafone claims almost 11m Opera Mini users.
• Network-based content adaptation solutions enable operators to deliver browsing efficiencies across all handsets. Not all operators have added internet content optimization into their networks but Strategy Analytics expects the larger tier operators to almost certainly will have.

User experience: The jury remains out Nokia’s claims that its browsing interface is significantly improved and is more intuitive. While it may be the case that, the browsing experience and overall device user experience needs to be comparable to low priced Android based competitors.  

On 14^th December 2011 location based service (LBS) provider TeleNav announced the availability of its HTML5 browser based GPS navigation service for a limited number of developers. The service will enable bricks and mortar retailers in the US to integrate navigation features onto its mobile website. Many retailers provide a map of business location on their websites, but this goes a stage further, allowing consumers with GPS enabled phones to access voice-guided directions to the merchant without needing to fire up a separate application. TeleNav aims to provide this capability for free, and there appears to be few barriers to entry for retailers.

Google employed a similar approach on the fixed internet, by making static maps available to almost anyone to embed onto websites for free. Google encouraged these users to build services on top of its maps. This free map strategy significantly boosted the presence and use of Google Maps online.

By making navigation available for free TeleNav aims to drive the availability of both its maps and voice navigation service on the mobile web, supplanting Google and other online map providers like Microsoft/ Nokia. With mobile generating 10% of website traffic for some retailers providing navigation in addition to maps for free is likely to be a no brainer!  Moving forward, I expect TeleNav will aim to monetize free navigation in a similar manner to Google. Google has segmented the market and only charges businesses leveraging Google Map APIs within a pay wall environment, for business-to-business use, or within the confines of an intranet.

Although this is undoubtedly a smart move by TeleNav, I expect it will be unlikely to replace the adoption of Google Maps or Nokia Maps APIs by businesses:

Both Google and Nokia will likely monitor the speed at which TeleNav’s free map and navigation services take off, and respond by replicating the offer.

Furthermore, although HTML5 supports offline mode, which allows an application to cache data for use when the handset is not connected to the network, I’m certain the user experience is likely to be compromised. That is exactly what this limited trial will aim to tease out!

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!

The mobile phone is evolving into a power commerce tool, enabling consumers to review products, run price comparisons, access inventory levels and to make transactions both over the mobile network and also at the retail point of sale. However, while industry commentators have hailed the virtues of mobile commerce for some time consumers have not responded positively beyond buying ringtones and wallpapers for their phones. So why will m-commerce begin to blossom in 2012?

Firstly, some big web retailers indicate that mobile is becoming a significant sales channel. In July 2010 Amazon announced that mobile devices generated US$1 billion in sales, 3.5% of its net sales during the 12 month period. Last month Ebay stated it expects to process $3 billion in payments (via PayPal) in 2011. To dispel the view that big ticket items aren’t ripe for mobile commerce Ebay indicated 3-4 Ferraris are sold via its mobile app each month!

Secondly, we expect to see more retailers create mobile sites enabled for mobile commerce. For a long time web traffic from mobile devices has been negligible, but once it accounts for over 10% of traffic, as it is for some retailers, merchants start to view it as a missed sales opportunity. 

Thirdly, a slew of services will be launched in 2012 enabling consumers to make small value payments by tapping their NFC enabled mobile phone against an NFC retail point of sale. 2012 will be a critical year for driving NFC handset sales and also encouraging retailers to adopt the technology, although we expect end-user adoption to lag due to inertia.

Finally, consumers increasingly recognise that product reviews and price comparisons conducted on mobile enable better purchasing decisions in and outside the store. Importantly, mobile payment is convenient and enables consumers to buy products when and wherever they want.

This post forms part of RCR Wireless' Analyst Angle: 2012 mobile trends - mobile commerce, product ecosystems, location integration

Google's Think-Mobile, held on 29th June 2011 in London, aimed to promote mobile as an advertising channel to brands, advertisers and agencies – something that Google appears to be been fairly successful at given its $1B annual mobile ad run rate disclose in 3Q 2010. During the event Google presented stats from a joint survey it conducted in the UK with the Mobile Marketing Association (MMA). A few stats stood out that I will comment on:

• 53% of users engage their mobile phones or tablets to do something (e.g. email, browse, games, etc.) while watching TV.  From an advertisers perspective complimenting an expensive TV advertising spot with a mobile engagement campaign makes sense as audiences sit in front of their TVs with their connected devices. Mobile engagement includes ensuring that a mobile website is synchronized with the TV ad spot (so that information relevant to a TV promotion is immediately prominent), through to broadcasting QR codes to drive engagement and simultaneously measure campaign effectiveness. According to Fiona Hall, Innovation Manager at Waitrose, a speaker at the event, a QR code broadcast during a Christmas TV ad was apparently very successful - this was a big surprise to me! I expect the incentive to scan a QR code in an advert needs to be attractive if the novelty is not to wear off in future! The topic of how the mobile can complement the TV screen will be discussed by Strategy Analytics in an upcoming webinar scheduled for the end of July and available to WMS and WML clients.

• 17% of top advertisers on Google have mobile friendly sites – Mobile optimization becomes a priority for businesses once 10% of traffic to their websites comes from mobile devices. Once this tipping point is reached there is clearly a need by transactional sites to optimize their mobile site for commerce. High profile web retailers (such as Amazon) have indicated strong growth in mobile initiated commerce, while PayPal claims it is on target to process $3 billion transactions by year end. Consequently, to help enable SMEs to mobilize their websites Google announced the launch (in beta mode) of ‘Google Sites Mobile Landing Pages,’ a template enabling any business to launch its own mobile site - for free. Using this tool SMEs will be able to integrate click-to-call and map location functionality. This product also supports Google Checkout to enable commerce and is clearly targeted at small businesses that rely on Google for leads but have little resource to develop a customized mobile solution – consequently while it is basic I expect there will be plenty of takers.