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. 

             

On 1^st February 2011 Openwave announced the launch of its Amplicity platform, which allows mobile operators to provide a dynamic toolbar to deliver third-party cloud based services that can be accessed within HTML5 browsers. 

The concept of operator toolbars is not new. Companies providing competing solutions, like Byte Mobile (Widget Bar), InfoGin (Browser-based, rich feature content overlay) and Flash Networks (My-I Toolbar) also enable operators to insert functionality into the browsing environment. These toolbars can be customized by operators to include a short cut button back to the carrier portal, or a button to for bookmarking web pages (which is managed by the carrier) or to share certain content, for example. Therefore, the presence of these functions within the browser environment enables operators to maintain presence with customers.

Amplicity takes this concept to the next level by enabling operators to distribute the cloud based services of third-party publishers and developers – effectively turning the toolbar into a marketplace. The announcement that GetJar is adding the capability for its publishers to develop services for the toolbar is significant given GetJar ranks as the global number two application store (based on number of downloads) and has a wealth of developers.

Although most operators have content adaption solutions to enable users with low end handsets to browse web content, few are providing toolbar solutions. The few deployments to date include TeliaSonera with SurfOpen (across its Northern European footprint) and China Mobile with OpenSurf. 

TeliaSonera’s SurfOpen browsing service received heavy criticism from web publishers and media companies, because its toolbar also delivered advertising banners and occupied valuable advertising real estate for web properties. The solution has now been modified so that adverts only appear on pages that have not been optimised for mobile access.  

Given this low appetite I believe Openwave will need to focus on two main areas to position Amplicity for success:  

• Toolbar User Experience: The UI needs to work well, specifically not interfering with the browsing experience. Users should also have the option to minimize the toolbar, so as not to occupy much screen real estate.
  • The toolbar needs to be kept ad-free or risk irritating users and web publishers.
• Build an ecosystem, not just a technical solution: The availability of a diverse and rich set of services via the toolbar is critical. Therefore, it will be crucial to engage the developer community. The collaboration with GetJar is a good first step but momentum needs to be maintained by:
  • Operator participation: Developers will be more likely to publish for a platform if it provides scale across carriers. Sprint is the only carrier partner today. Without support from operators the audience, and thus the incentive for developers, will remain limited.
  • Common operator APIs: The absence of consistent APIs from operators (e.g. to leverage billing or analytics platforms) introduces fragmentation at the operator level. Developers want a consistent set of APIs in order to provide services across different operators rather than work carrier by carrier. Openwave needs more carriers not just to sign up, but to open up a common set of attributes.

Nitesh Patel

The failure and subsequent sale of News Corps direct-to-consumer (D2C) mobile asset, Fox Mobile Group, (which includes Jamba, Jamster, Mobizzo,  iLove, and Bitbop) to Jesta Group underlines the challenges faced by media companies aiming to build a position in the fragmented and fast moving media landscape. Furthermore, it serves to highlight the need to understand <a href="http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=4732">the dynamics underpinning mobile media content distribution</a>. 

News Corp. acquired a controlling interest in D2C mobile content provider (e.g. ringtones, wallpaper, games, and video) Jamba from Verisign in September 2006 for $188 million. In October 2008 it acquired the remaining 49% for $200 million. The unit was merged with the Fox Mobile Entertainment unit. 

There are obvious pros and cons for media companies to develop their own branded distribution channels. On one hand media companies can take a greater share of consumer spend if they retail the content themselves, rather than through an operator or mobile content store that take a share of revenue for retailing. Owning distribution also allows media companies to control their business model and promote their own content favourably ahead of other content providers. Media companies also have the capacity to make their own content exclusive to their portal, creating consumer demand to visit their sites (assuming they have desirable content). On the other hand owning distribution channels can lead to internal conflict between whether to license content for distribution through alternative channels or not. Most importantly, content distribution requires a different set of skills to media creation e.g. content acquisition, aggregation, and merchandising among others.  So, despite access to strong and desirable content, and the fact that globally <a href="http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=5750">consumer spending on premium mobile content will continue to grow from approximately $35 billion in 2010 to $65 billion by 2015</a> what went wrong?

<strong>1) OEM stores to the fore:</strong> OEM application stores, lead by Apple’s App Store have become a popular method of accessing mobile applications and content. 

a) OEM app stores provide greater diversity in applications and content than the traditional ringtones, wallpaper, games and video content offered by many D2C mobile portals. App stores also offer content from a large number of content providers. 

b) OEM stores are typically well integrated with the handset and provide a better user experience than ordering via mobile internet or using premium SMS.

<strong>2) Sullied brand:</strong> Jamster and Jamba developed a bad reputation for misleading young consumers into signing up to expensive subscription based services. Although it attempted to amend this image the tag remained.

Although Fox Mobile Group no longer exists we do not expect News Corp. to abandon its ambitions in this area. In our opinion emphasis should now be placed on driving branded applications and content distribution through popular OEM app stores, while simultaneously licensing content to publishing brands that have achieved success in content distribution, e.g. <a href="http://blogs.strategyanalytics.com/gwp/?p=171">Hulu or Netflix</a>. 

Nitesh Patel

On 1st December 2010 US ad network Millennial Media officially announced its expansion into Europe, entering into a fairly crowded mobile ad network space, which also includes Google (which acquired AdMob in 2010), Apple, Smaato, Yahoo, Microsoft, 4th Screen Advertising, Unanimis, Yoc, Sofialys, and DaDa among others. Strategy Analytics was invited to its launch presentation to hear more about its plans and ambitions. Globally, the Millennial Media mobile ad network is currently delivering 16 billion page impressions monthly, with Europe generating 2 billion (just 12.5%) of that. With Ofcom today indicating that 26%, 21% and 18% of cellular users in Italy, Spain and the UK respectively owns a smartphone, there is clearly still potential for growth in Europe, as more mobile phone owners substitute feature phones and expensive pay as you use data tariffs with smartphones tied to generous data plans. Indeed, Strategy Analytics also believes there is growth opportunity in Europe, and predicts strong growth in mobile display advertising with advertiser expenditure rising ten fold $600 million in 2010 to $6 billion 2015, as more users drive mobile web page impressions. So where does Millennial Media believe it will fit in to the existing mobile advertising market place? Well, it’s aiming to find the middle ground between premium ad networks like 4th Screen Advertising, and Orange owned Unanimis, which aim to maximise inventory return for premium publishers to get high CPMs, and blind ad networks aimed at filling large volumes of unsold inventory where its all about low CPMs and volumes (see figure above). Millennial Media does not intend to compete with the higher value mobile marketing campaigns from Blyk, Hipcricket or mobile operators like O2 Media. Personally, I’m a bit sceptical this gap really exists. So ultimately I do expect Millennial to fall into the blind ad network bucket over time. On the other hand in these tough economic times brand advertisers are increasingly looking for metrics to prove advertising ROI, in which case Millennial Media will be well positioned to grow. Either way, validating Millennial Media’s claim is something we hope to do as we continue to conduct more research into this area. Nitesh Patel

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

Amazon has announced that over the past 12 months purchases made from mobile devices generated US$1 billion in sales, representing almost 3.5% of its total net sales during that period. $1 billion is clearly a large amount of money and 3.5% not an insignificant share. Furthermore, Jeff Bezos indicated that smartphones have had a strong role in driving mobile commerce to date, which is not surprising given the larger screen size and better resolution provides an improved product browsing experience over standard phones:- "The leading mobile commerce device today is the smartphone, but we're excited by the potential of the new category of wireless tablet computers. Over time, tablet computers could become a meaningful additional driver for our business." Unfortunately, there was little further information relating to the type of products being purchased via mobile, e.g. whether or not it includes the sale of ebooks, or the % mix between digital content (e.g. MP3) versus physical goods? However, this announcement, combined with the increasing volume of web traffic generated by mobile phones, and the fact that that the global smartphone installed base is set to expand from 458 million in 2010 to 1.1 billion by 2015, has a clear implication for web retailers that are seeing increasing mobile traffic to their sites: Integrate mobile to your digital sales process, because a growing share of consumers are using their phones to buy stuff! Perhaps not surprisingly, Amazon has been ahead of the curve with respect to mobile commerce for sometime. It currently offers dedicated smartphone applications for the major smartphone platforms (Android, Blackberry, iPhone, and iPod Touch) in the US. The absence of support for Symbian is clearly a consequence of Symbian’s low penetration in the US. Amazon has also designed mobile optimised sites for smartphones and in June 2009 Amazon’s subsidiary A9.com acquired Snaptell, a company focused on image recognition and visual search technology which allows users to take photos of products and find pricing information, rather like Google’s Goggles (still Beta) and ScanBuy. Linking the image capture capability on camera phones with off-board product recognition, price comparisons and product reviews can help to convert the handset into a powerful commerce device in my opinion. Perhaps most importantly though, Amazon allows users to register their payment details to their account and to make purchases using a single click, through its 1-Click ordering system, which eliminates the inconvenience of manually entering payment details. For many web retailers adapting for mobile is not likely to be a priority yet – few will have forgotten the dotcom bubble bursting. However, I believe this announcement by Amazon provides an indication of the potential size of the missed opportunity if they do fail to address evolving consumer behaviour. Nitesh Patel