For my reading audience, as well as those tuned into the Mobile Influencers Podcast at iTunes, here’s Mobile Point View's 2009 Mobile Industry Predictions
Consider the following.
- Roughly 13 million iPhones were sold by Sept. 30, 2008—as recorded by Apple in their Q408 financials
- The iPhone store had 200 million downloads in the first 100 days, so that is 2 million downloads/day.
- Those 13 million iPhon-iacs downloaded approximately the same number of apps in 30 days that 250 million non-iPhone owners downloaded in 90 days.
- That’s a 60x multiple in terms of the likelihood that an iPhon-iac will download an app than a non-iPhone owner.
- Conclusion: You need 780 million non-iPhone owners--iPhon-ophobes?-- with access to your application before you could match the actual reach of 13 million iPhone owners.
- 5500 apps in the App Store have created $1Billion annual run rate in App Store revenue. A billion dollars boys and girls.
- Apple has leapt into second place worldwide in terms of smartphone sales with their Q4 figure of 6.9MM units sold, selling more iPhones than Blackberries. iPhones now own 17% of the worldwide smartphone market.
- With Wal-Mart’s recent announcement of the iPhone availability at the world’s largest retailer, the halo effect of the iPhone migrating to lower economic segments will only accelerate its market penetration.
Mobile will “reset” just as the rest of the economy is being re-set
With the rest of the world’s economy engaging in a ‘re-set’ over the coming year, the economics of the mobile business will have to be re-set within the minds of analysts and operators. GE CEO Jeff Immelt stated in November that the economic crisis projecting into 2009 “represents a re-set, ...with the biggest reset will be government involvement in the economy, and in the affairs of business, for better or worse.”
Incremental penetration of mobile communications across all economic segments will not abate, but the tough reality is the “mobile money party” is likely to be over. Savage choices by consumers will be made with a higher unemployment rate by mid-year, and ARPU may decline precipitously in the coming months even with increasing gross net ads of subscribers. Yes, there still is a need for voice and data, but don’t expect double digit growth in the segment for sometime.
The Emerging US Broadband Gap
In the US, incoming President Obama’s initial inclinations are to make a big government ‘infrastructure’ investment to counter attack the recession. Let’s hope that it goes beyond bricks and "bridges to no where” to include digital bridges as well. The US woefully lags behind other nations in the upload and down load speeds of its wireless networks, and even broad mobile functionality as compared to other country markets around the world. Why isn’t anyone talking about how we should be investing in faster mobile networks, whether as part of broader Wi fi coverage or wide area mobile networks? They will be. Soon. JFK got elected on the back of the “missile gap”, expect some enterprising American politicians to start bringing attention to this sorely overlooked topic of the mobile bits and bytes infrastructure in 2009.
Interoperability Part 2
Thirteen years ago interoperability surrounding text messaging had just been implemented in Europe, with the US soon to reach that same stage of development. Under the covers, messaging now has a de facto hub and spoke structure between aggregators and carriers. Look for that to solidify, not to the benefit of say MMS, but to its detriment. Innovations such as Syniverse’s IM SMS interoperability hub will ignite the broader offerings of mobile IM by carriers, greater usage by consumers, thus narrowing the offer of MMS to the niche of picture transfer, and even there it doesn’t always work. Look for big steps to be taken for IM and SMS interoperability in 09.
Chill of potential regulation over Mobile Marketing
There are growing fissures in the mobile marketing business model. The announcement by Verizon in October to increase the fee paid by others to deliver into their network for the purpose of mobile delivered advertising, aka "standard rate termination fees" has caused a significant chill in the market. Not necessarily with the operators, nor the consumer, but the guys who pay the freight: Brands and advertisers who see an unstable pricing model by a core supplier as a real risk and big uncertainty. Notwithstanding the growth of mobile marketing as well as its huge potential, the expectation that 2009 is the year of mobile marketing may be extended. Layer on Capital Hill, as well as state level Attorney General offices, are getting more interested in this segment, its costs structures and business model of mobile advertising. Greater transparency is the new zeitgeist so If the ecosystem isn't careful, 2009 might bring a cold blast from the likes of Wisconsin Senator Herb Kohl who chairs the Senate Commerce Committee.
China will finally launch the iPhone...sometime in 09
Apple is facing the dilemma of a choice between the Dragon and the Deep Blue Sea. Either get into the world’s largest mobile phone market (currently nearing 700 million subscribers) or break the imposed revenue sharing model with operators currently in effect in other countries around the world. Having worked and lived in China, as well as negotiated with China Mobile and China Unicom, when I see quotes as those from GSM Asia in Macau last November: “Secondly, our business model does not entail sharing revenue with terminal producers -- we don't share revenue. That's a Chinese rule," said a China Mobile executive," makes me believe the Chinese have the advantage. Apple has 365 days to give, which they will.
Strong Balance Sheets, Emerging Corporate Venturing and Over Fragmentation
2009 will bring the close of many VCs. It's inevitable, there has been many marginal funds that are not going to last, many of which were making early stage investments, some in mobile. The contraction within the VC industry, as well as the general contraction in the economy will spur an emergence of more venture activity by Corporate Venture and Innovations Groups. During tough times, leaders move to consolidate their industry position as well as 'catch a march' or 'lengthen their stride' against their rivals, and as the vacume increases from diminished venture fund activity, expect to see an increase in large private and public companies to expand their activity in venture funding. Those that have strong balance sheets will lead this effort. One result may be the lessening of 'serial entrepreneurs' who have little or no mobile experience, and instead look to see C level changes as both VCs are forced to make savage choices and corporate innovations groups leverage their investment by placing seasoned and successful entrepreneurs back at the helms of mobile companies--meaning older, grayer, and more experienced executives who have navigated and successfully survived past recessions. Mobile suffers from over fragmentation, and consolidation will be a definer in 09'er.
In the spirit of Sequoia’s notice to its venture investments, I’m cutting back by 30% in my predictions this year to conserve my muse resources, demonstrating higher efficiencies and lower burn rates, reflecting a 'shrink to grow' mentality. Of course that begs the question of my impact and productivity....
Happy New Year to all my readers and supporters of Mobile Point View around the world. May your immediate and intermediate time lines be stable, and your over the horizon be prosperous.
Or as the Chinese say: gōng xǐ fā cái !