Mobile Point View by Paul Ruppert

This Blog Has Moved

 

Paul Ruppert is now blogging about global business and the mobile communications industry at www.globalpointview.com

RCR Wireless goes dead

In a surprise move, RCR Wireless announced today it is shutting down after 25 years of covering the wireless segment. I've read the trade mag on and off over the last 15 years and in many ways am not surprised.

First, it reflects the expanding destructive effects of news gathering via the web as opposed to newsprint. But it can't be ignored that it also reflects the problems in the wireless business as well. RCR focused mostly on the US market, and had an emphasis on the old "wireless business" tracking mostly the public traded entities--none of which are doing very well--and missing the development of developers' influence and the growing fragmentation of the industry. It's style reflected that of a mid tier US city local business rag, think Kiwanis, local bankers and lawyers, instead of a global industry media outlet covering the  constantly ebbing and flowing--mostly due to the tastes and choices of trend following 15 to 35 year olds--of a global pool of users. As a result it skewed its coverage to infrastructure and has struggled in breaking news regarding the shift towards apps and content framing the ecosystem, a the expansion of adjacent opportunities migrating to mobile, advertising, location, payments, video, plus the plethora of start ups in the mobile segment--all magnified on a global level You could easily see coverage of repeaters, tower exes, and handset wars, but how often was there something on say, SpinVox or Mobile Dreams?

No doubt there will be those newly arrived upstarts who felt it was just a mouth for "the carriers" or the US' CTIA, instead of kowtowing to the the newly arrived religions of the iPhone and Andoid. But, service usage absent revenues isn't a business model, apps are not a business--unless you own "the store", and dial tone reliability isn't going to be provided by some High School Harry developer in a garage. The reality is that the industry needs balanced coverage between the two. The best I've seen to date is Charged and Mobile Communications International. Two slick publications which reflect the old guard and the new, US and Rest of World, in a balanced manner. Check them out and develop fresh reading habits.

Blast Effects on Mobile

With the constant drumbeat of the downward economy, evidence is emerging that there are distinct regional differences in mobile's economic strength across the world.

Informa recently noted that the subscribers continue to sign up for services in some of the most desperate economies of the Africa and Southern Asia, while the the over saturated and nearly satureated markets of Europe and US are in for either a quick or slow contraction.  India has become the world's laregst market in terms of net adds for the first time in 2008, with 102 million new subs, exceeding China.

I'm Reconsidering my position

The Mobie Pundit-ocracy has been positioning that mobile has been resilient to the deteriorating global economy, focusing primarily on the stablilty of operators making plans to lower costs, and downsize their businesess. Handest and network equipment vendors are thought to be the first line to be effected with consumers putting off the upgrade or replacement of their handsets, with the indirect ripple effect causing contraction in the network infrastructure flattens due to differed data usage and less than expected usage rates forcing operators to delay any network upgrades.

The blank spot in most of these analyses is the complete over focus on the biggest players--those publicly held entitites or uber-mobile players such as (of course) Apple, Google, Nokia, Motorola, Ericsson and the rest, and the lacking acknowledgement of how much the industry is about to change due the lack of funds and operating oxygen smaller players are facing and how that is going to change the ecosystem. Layer on the contraction of the venture industry, and collectively mobile is likely to be a very dull and (further) disappointing segment. 

The reality is that the global recession started in early 2008, with the impact in the second half of 2008, and now the blast effects worsening in 2009. Consider that the  world's mobile subscription market grew by 18.5 per cent year on year in 2008, down from 22.5 per cent growth in 2007, and is set to increase by just 12.7 per cent this year. That's a 44% drop in global handset growth in 18 months.

Unsurprisingly, the world's developed markets will be hit especially hard with the total device market in Western Europe set to contract by 13 per cent in 2009, and it could take as long as three years for the European and American device markets to get back to 2008 sales levels given that replacement cycles are likely to increase by a wopping ADDITIONAL 8 mohths in 2009, moving handset holding periods approaching 2 years on average.

Lesson Here: Avoid investments in handsets and infrastructure providers, and weigh carefully any applications plays.

Noteworthy Predictions

I came across one of the more thoughtful group of Mobile Predictions at Mobile Messaging 2.0, by Airwide Solutions' Chris Lennartz.

       Here's the 9 Top Line Predictions for 09.

1. Mobile Messaging will defy the economic downturn
2. Less Developed regions will fuel new peaks in SMS activity
3. China will fuel MMS uptake
4. Personalization will come of age
5. Mobile Marketing & Advertising will surge ahead
6. Mobile internet will overtake 'tethered internet' usage
7. Focus on mobile security will increase with the coming of mobile commerce
8. The Digital Youth will drive transformational changes in communications
9. Mobile will go green

All are spot on, and reflect reasonable goals and perspectives in a field which is usually fraught with hype. If you drop by www.mobilemessaging2.com there's also a group of slides reflecting special research commissioned by Airwide with Commscore M:Metrics. A nice bonus....

In times like these, any company in mobile should keep a candle to the winds of pessimism, and pursue a practical path of focusing on gaining a better understanding of, and more effectively manage the needs of, their customers and secure customer loyalty--a priceless advantage at any time, whether in 2009 or into the future.

 

Mobile Point View's 2009 Predictions on the Mobile Industry

Ah, the end of the year approaches (thank God) and requires the usual journalistic right of passage--predictions for the upcoming New Year in the mobile industry.

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

iPhon-ification Continues
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.

Operating Efficiencies
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 !

Now on iTunes: Mobile Point View Podcasts

Ever seeking a chance to expand my communications efforts and marketing of Mobile Point View, my Mobile Influencers Podcasts are now available via iTunes and the iTunes store.
 Log into your iTunes account and either search for "Paul Ruppert" or "Mobile Point View by Paul Ruppert" and you can select from any of my growing library of podcasts--all 38 will soon be available on iTunes for your listening convenience spanning over 9 hours of interviews with leading CEOs, innoavtors, and Mobile Influencers. Plug in and add it to your "life soundtrack, and feel free to add a Customer Review while your there. Much appreciated.

Psychology not Technology: On TV at the Mobile Marketing Association

BnetTV.com's correspondent Michele Sklar interviewed me at the Mobile Marketing Association forum in San Diego, CA on November 12th.

You can view the 8 minute interview by clicking here. Covering the range of issues at the MMA's Forum event I spoke of how advertisers need to be focusing on the psychology of making mobile impressions instead of the draw of the technology of mobile. The contextuality of mobile, it's "lean forward" and small screen more dynamics require emphasis  on the creative side of mobile advertising instead of being drawn to mobile's power to provide more impressions over other types of traditional media.

Mobile Culture Codes across the Globe
The context of differences are more important than similarities once you go global, and Michele and I covered how differences between the North America, Asian and European mobile advertising markets are shaping the development of mobile marketing globally.

Case Made: Recession Proof Business Models for Mobile Marketing

With economic ripples crashing against our ecosystem we also covered the false reality of a shrink to grow strategy under stressful economic conditions, and why mobile is well suited to survive as a component in broad advertising intiatives because of it's impact, high return and competitive strength against other larger, ahem less effective components of an overall advertising campaign.  Learn more by viewing the entire interview here.

Mobile Cataclysm: Angels, VCs, Capital & Confidence?

No one can avoid all the noise these days regarding partial, full or potential bank nationalizations (depending upon what country you're in), CDO swaps, the recent edict of venture capitalists in their Menlo towers to their start up investments: drastically reduce burn rates & batten down the hatches, as well as the general pessimistic view that the sky is falling in all segments across all economies. Which is constantly  perpetuated by the cable media to sound the alarm--any alarm--to capture audience. 

Somewhat ironic for me personally since in my past career as a legislative policy pusher, I was once responsible for the George Herbert Walker Bush administration's legislative docket for the now infamous Fannie Mae & Freddie Mac. [Note: Don't believe that this is a problem of the last eight or sixteen years, it has been a systemic threat for the last 30 years. But I digress from why you visited MOBILE Point View today, not FINANCIAL Mess Point today.]

As the crises has continued to build I've started thinking about "slumping tech" caused by ripple effects of the impending 'uber recession'. Yet, in more contemplative moments I've asked myself,and others repeatedly, whether anyone thinks this cataclysm is going to hit mobile as hard as it hits everything else? The collective opinion by more than a few 'wireless influencers' is: NO. 

Last week I spent a morning with a group of Angel investors in Washington DC reviewing potential companies--two which had mobile components to their value proposition. At the breakfast before there was some grousing that individually the attending angels had experienced some "contraction" but as a group they were not running to liquidate all holdings and defending cash positions, which we should not forget is where fledgling companies get their funding from. As a group--extremely experienced as both technologists and investors--they were still looking for investments to make, especially now with time to build out companies which can rebound higher later. No angels were running for the exits.

The same day in the afternoon, I was talking to a senior IT exec at a public company. On mobile his perspective was straightforward: "All this talk from the financial pundacracy that tech is going to contract so radically is BS. Bottom line is guys like me already have 90% of our budget mandated, required, by core functionality. If we cut back on that, we cut back on core services. That isn't likely to happen. It is the 10% variance which we play with that may get affected. But even there, where do you capture efficiencies best? Automation and mobilization." There's that mobile component that can't be ignored. "Depending upon how highly leveraged a tech company is, the bottom line is we are not falling back into a pre-industrialized economy," he said smartly.

The following day I reached out to a few VCs and asked them about their proclivity to invest now. As one put it, "I've been successfully raising money for my next fund for over year. I'm not going to pull back on making the investments, let alone the pressure from my LPs will not subside to get the money to work."  Um, guess the focus continues to be on the future.  Not surprising given that VCs examine risk and opportunity all the time, at least the good ones do. Those that were pushing the alarm last week, one has to ask how many of these guys have ever really had to make payroll? That's a post for the future. Net net, full speed ahead, just look out for some adjacent storms.

Last point. Just look at the continuing trend of mobile penetration around the world, especially in developing countries. There may be lesser growth rates in the mature markets of Europe and the US, but where mobile is being fueled in China, India, Africa and South America, consumers will substitute or do without in order to get a mobile phone and benefit from it's conveniences. ARPU is already low in many of these regions, but operators there are capturing value even in these bottom of the pyramid plays--don't believe me?

Did you know that when Reliance was looking to acquire MTN in South Africa, they were willing to pay more than Microsoft had priced Yahoo? Really. If three data points constitute a trend, don't bet against mobile. Tomorrow I'm in New York city for three interesting days there.

Alternatively during these turbulent times, consider the following....

In 1923, some of the most successful and richest men consisted of:

president of largest steel company in the US
president of largest gas company in the US
president of the NYSE
greatest wheat speculator in the US
president of the bank of international settlement

What became of these men and their fortunes?

Carol Schwabb, of the largest steel company, died as a pauper
Edward Hobson, of the largest gas company, went insane
Richard Whitney, president of the NYSE, eventually released from prison and died at home
Arthur Cougar, the wheat speculator, died abroad--penniless
C.B. Livermore, lion of wall street, committed suicide.

Yet that same year, 1923, Gene Sarazen, a professional golfer, won both the US Open and the PGA Championship. He died in 1999 at 95 years old. Played golf until he was 92, and was solvent at the time of his death.
Conclusion: Stop worrying about business and spend more time playing golf!

Beijing's Birds Nest Mobile Bonanza: 5.5 calls per seat, $500,000 an hour

 

Half a Million Calls, from 90,000 people over 4 hours!

According to China Mobile, close to 500,000 calls were placed from the Bird's Nest Olympic Stadium during the Olympics Opening Ceremony.

Everyone in the stadium made over 5 calls over the four hour period, or roughly 1.4 calls per hour by every attendee.

$600,000 per hr
Boys and girls that translates to over $2.5 million in revenue for just the opening ceremonies from one venue. That includes over 250,000 unique registered international roaming services users during the opening ceremony.  You wonder who they were calling all around the world. Nice revenue stream.

24,000 unique users made calls during  the Olympics closing ceremony, which included 20,000 roaming service users.

The company says that it achieved a 100 percent connection rate and only 0.27 percent of calls were dropped by the network.

Remarkably, some 1.2 million China Mobile users watched the games on their mobile phones and 13 million users received Olympic video newsletters via their mobile phones.

One Year in my Blog Life: Keeping Score at Mobile Point View

Readers from 128 Countries

Journalistic cycles  are often driven by calender milestones so today I celebrate my first anniversary as a blogger--albeit it slightly tardy. 

I started Mobile Point View in April of 2007 primarily to frame and define my "personal brand", project and shape awareness of my industry perspective and "thought leadership", enabling me to keep my eye focused on the mobile industry and global business trends through a discipline to discuss my views.

Along the journey I found it also fed internal motivations such as a love/hate relationship with writing, and my wanderlust for "Adventure Roads" and "Adventure Capitalism."

Plus, it feeds my spirit to learn more about other cultures and keep my skills sharp in making connections--both technical and human.  I've been told I've got a combinatorial world view which my blogging reflects, being part travelogue, wireless industry and global commerce analysis, pus a passionate interest in high growth markets such as China, Africa, and the Middle East.

Recognitions & Connections

An unexpected turn along the path has been the recognition of my views and writings by technoscenti like Om Malik of DigOm, Gerry Purdee of Forrester Research and mobilista Rudy De Waele. A surprising approach by Mobile Messaging 2.0 to contribute to that corporate sponsored blog has led to additional "thought leadership" and recently my being tapped to be the Managing Editor of Mobile Messaging 2.0. So now I'm a "professional" journalist, meaning my meanderings put some coin in my pocket.

Another unexpected consequence of having a cyberspace billboard has been the people I've become acquainted with--gratifyingly in other countries--who have graciously shared their time, interests and expertise with me by reaching out and establishing a personal connection as result of my views, especially Lars in Tokyo, Ben in Beijing, Mikki in Hong Kong, Tarek in Egypt, Feng in Beijing, James in London, and Mohammed in Iraq.

Reflecting a modicum of success, the connectedness of the mobile industry and power of the internet, the number of others who I have met at conferences who entered a conversation with "I know you, I've read your blog!" has been surprising and energizing.

What I'm most proud of is being relevant and interesting to readers from 128 countries.   

After a year of blogging, I've got a slurry of mixed metrics on total visits (over 100,000 ), page views, time on blog, google juice, etc., but the one which I'm most proud of is the reflection of my reach and global view point.   Having readers from so many countries reflects my purpose, passion and pursuits to illuminate the power of mobile communications to consumers and its fundamentally global characteristics. 

Interesting Quirks of Where My Readers Are 

Some interesting aspects of my readership include:  9,600 visits from readers in India, 900 visits from readers in Pakistan, 30 visits from readers in Myanmar, over 740 visits from readers in Iran, and 400 visits from readers in Nepal. I've got one regular reader in Foggaret el Arab, the dead middle of Algeria with a population of 4,300. The snowiest reader must be in Bathurst Inlet, Nunavut, Canada--probably someone visiting the Lodge.

I guess that reflects the power of the web, the strength of interest in mobile communications, and once in a while my ability to strike a chord which resonates with a variety of people in diverse international locations. 

Here's a tally of reader countries as of June 2008

A Year in the Blog Life
	Visitors from 128 Countires
Americas (25)	Europe (40)	Asia (26)	Middle East (11)	Africa (26)
US	UK	Australia	Afghanistan	Algeria
Barbados	Andorra	Bangladesh	Bahrain	Botswana
Bolivia	Aserbaijian	Brunei	Egypt	Cameroon
Brazil	Austria	Cambodia	Iran	Canary Islands
Canada	Azores	China	Iraq	Cote D'Ivoire
Cayman Islands	Belgium	Fiji	Israel	Djibouti
Chile	Bosnia	Guam	Jordan	Ethopia
Columbia	Bulgaria	Hong Kong	Kuwait	Gambia
Costa Rica	Czech Republic	India	Oman	Ghana
Dominican Republic	Denmark	Indonesia	Qatar	Libya
Ecuador	Estonia	Japan	UAE	Madagasacar
Grenada	Faeroe  Islands	Kazakhsatan	Yemen	Mali
Guatemala	Finland	Korea		Mauritius
Haiti	France	Laos		Moambique
Honduras	Georgia	Malaysia		Moldova
icaragua	Germany	Marutius		Morocco
Jamiaca	Gibraltar	Myanmar		Mutitania
Martinique	Greece	Nepal		Nigeria
Mexico	Iceland	New Zealand		S. Africa
Paraguay	Ireand	Pakistan		Senegal
Peru	Italy	Philippines		Sudan
Puerto Rico	Latvia	Singapore		Swaziland
St. Vincent	Lichtenstein	Taiwan		Tanzania
Trinidad	Lithuania	Tajikistan		Togo
Urguay	Luxemburg	Thailand		Tunisia
Venezuela	Macedonia	Uzbekistan		Uganda
	Mallorca	Vietnam		Zaire
	Malta
	Monaco
	Netherlands
	Norway
	Poland
	Portugal
	Romania
	Russia
	Serbia
	Spain
	Sweden
	Switzerland
	Turkey
	Ukraine