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

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?

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

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