I often think of the mobile space as being consumer led, particularly when it comes to media and services. The "next big thing" often seems to crop up out of nowhere, blindsiding the bulk of the mobile industry which often has its blinkered eyes fixed on pushing some new technology rather than listening to consumers and seeing what they are doing.

Mobile TV was one such great white hope, and it hit the market to a collective shrug of the shoulders from consumers, who had all moved on to using on-demand video services and had lost interest in traditional broadcast TV. Sure, it was a spectrally effecient way of distributing video content, but it wasn't the content they wanted when they wanted it, and I've yet to meet the average Joe who gives two hoots about spectral efficiency.

Seems to me like history is repeating itself with mobile payments. "You can replace your credit cards with your mobile!" So what? Where's the real advantage to the consumer in doing that? What consumers are doing in stores, right now, is that 67% of them are using their smartphones for researching products and comparing prices. That's what they want to do. They want to use the capabilities of that device to do something practical and useful for them. Compare that to the 1% using contactless payments.

This time, unlike mobile TV, it's not mutually exclusive. But mobile payments in isolation aren't going to make a compelling proposition. As I said in the press release for the report, "bricks and mortar retailers are not waiting for carriers or OEMs to roll out mobile payments and are leveraging mobile solutions already in the market, such as mobile advertising, couponing, loyalty cards and alternative payments, to drive footfall in stores, and convert that footfall into revenues." So far, it's looking like while the mobile industry beavers about trying to insert itself into the payments value chain through NFC technology, companies profiled in the report like Starbucks that are building the consumer relationships necessary for success. It's the mobile industry that needs to wake up and smell the coffee.

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

Instagram (owned by Facebook) created its own little PR disaster this week. It added these words to its new terms and conditions:
"You hereby grant to Instagram a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the content that you post on or through the service ... a business or other entity may pay us to display your username, likeness, photos, and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you."

The company has now changed this part following a backlash from users, and said in its blog that "it is not our intention to sell your photos". I'm not so sure that their defence of "Legal documents are easy to misinterpret" rings true - the language used initially seemed very clear. This smacks of an attempt to change the terms and conditions which subsequently misfired and Instagram/Facebook had to back down pretty quickly.

Now that the terms and conditions have been changed to something rather more reasonable, it seems this little storm will blow over. However, since the acquisition of Instagram, this type of change to terms and conditions was always on the cards. Based on what has happened previously, a vocal minority of users will disagree and some will end their existing accounts, but so far none of the changes to Facebook’s T&Cs have significantly impacted its growth, and the overall short term impact is likely to be minimal, especially since the company backed down (for now).

However, in the longer term, this does add to the regulatory concerns that many government agencies globally have with Facebook and others (including Google). Will Facebook try and change the terms and conditions again in a year’s time? What about public photos on Instagram or Facebook, which anyone can access? The person uploading the photo has agreed to the terms and conditions, but that doesn’t mean that every person featured in a photograph has – what about their privacy? In the short term, I expect little impact. Whatever impact there is, is likely to be longer term and could be quite significant. Years are more the timescales that regulators work to. Facebook can afford to ignore the moaning bloggers, but can it afford to continue to ignore regulators?

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.  

Strategy Analytics predicts combined consumer and advertiser spend on mobile media (which includes handset browsing, mobile applications, mobile games, mobile music, mobile video, mobile TV, ringtones, wallpapers and alerts, including content, applications and associated data) will increase grow at 8.4% CAGR over the next five years.

Consumer spend as a proportion of total mobile media spending will fall from 95% at the end of 2011 to 87% by 2017 as advertiser spend rises.

Advertising spend is forecast to grow at 20% CAGR from a base of $6.3 Billion Handset browsing will continue to represent the largest mobile media category in 2017, generating almost 55% of total consumer and advertiser spending. In comparison mobile games and applications will represent 24% and mobile music (which consists of ringtones, ringback tones, music downloads and streaming music) will contribute 9%.

Asia Pacific will continue to contribute the largest share of global mobile media spend in 2017, accounting for 44%.

What percentage of the $150B mobile media spend is for transport in 2012 and how will this change over time?

How many users and what spend levels will come from social media in the next few years?

What will fuel the $9B premium spend on social media on mobile?

What is the outlook for Mobile TV by region?

How rapidly will ringtones and ringback tones decline?

How much will users in BRIC countries spend on mobile media in 2012?

Client Reading: http://tinyurl.com/6s944u9

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!