Highlights of TiECon2012 Mobile Sessions-Part 1: mobile operators, emerging trends, applications and opportunities

Introduction

One of the highlights of TiECon2012 (The Indus Entrepreneurs annual conference- May 18-19th in Santa Clara, CA) was the Mobile Track.  All important aspects of the mobile ecosystem, its present status and future directions were explored in depth during three TiECon mobile track panel sessions:

  • What are the emerging trends, applications and opportunities in mobile?
  • Considerations for deploying mobile in the enterprise and vertical industry apps.
  • How to distribute and monetize your mobile app?

There was also a TiECon panel session on social gaming that was very much mobile related. For example, who will be the Zynga of mobile? What’s the intersection of mobile and social? Who will control the mobile platform?

We’ve previously provided a preview of the first mobile panel session on market status, trends and opportunities.

In this article, we report the highlights of that first mobile panel session. The other three related mobile sessions will be described in the second part (II) of this article.

Mobile Panel #1: What are emerging trends, apps and opportunities in mobile?

Session Organizer & Moderator:

  • Raj Singh, CEO, Tempo AI

Speakers:

  • Matthew Howard, General Partner, Norwest Venture Partners
  • Erik Ekudden, Vice President, Head of Technology Strategies, Ericsson
  • Anil K Doradla, Research Analyst, William Blair & Company, L.L.C.
  • Lars Kamp, Strategy & Corporate Development, Accenture Mobility Services
  • Ben Riga, Senior Technical Evangelist for Windows Phone 7, Microsoft

Panel participants first debated the role of the mobile network operator, who this author believes is between a rock and a hard place. Operators have to subsidize smart phones and upgrade the capacity of their networks to accommodate the spectacular increases in mobile data traffic. But they are not generating any revenues from premium services or value added offerings that make use of the increased bandwidth they must provide to their data plan subscribers. Here are a few take-aways:

  • Matt Howard: Mobile operator opportunities are in enterprise apps and managed services. They’ve lost the consumer app and app store business.
  • Anil Doradla: Operators are only getting increased revenues from data plans with higher priced tiers.  Currently the mobile operator has been reduced to a dumb bit pipe provider, but the jury is still out as to whether operators will  continue as such (or provide value added services, share in mobile ecosystem monetization).
  • Ben Riga:  Mobile has become a global platform, but operators don’t have the necessary information (location, customer preferences, etc) to do target marketing.
  • Lars Kamp:  Mobile Operator business depends on the country and their business objectives.  Over-the-top  (OTTP) content is a severe problem for operators, because they have to carry that high bandwidth data/video content but don’t get any revenue from doing so.
  • Erik Ekudden:  To ensure a good user experience, operators need to upgrade mobile network capacity; else the network will be a bottleneck (in many cases, it already is, e.g. AT&T’s 3G network).

The next area of discussion was Mobile Apps, App Discovery and App Stores. Here were the key panelist comments:

  • New challenges and opportunities are emerging, especially with bigger screen sizes on mobile devices.
  • There are different ways to monetize apps. What role will each of these play: analytics? CRM? Tracking user preferences? Location Based advertising? Virtual goods? On line gaming?  Lots of questions, but few answers.
  • The use of embedded performance analytics to get insights into the user was considered essential to success of properly monetizing apps.
  • Securing ongoing subscription fees to replace one-off download sales was seen as a challenge, even for mobile gaming leaders like Zynga.
  • Anil was bearish on the app store business model. The low barrier to entry encourages many app developers, but only a small minority succeed. The key players are Apple and Samsung who have 55% market share of mobile devices. So a developer needs to get the app on those app store platforms.
  • Anil said that enterprise centric apps have more potential than consumer apps (we definitely agree).
  • Erik opined that apps which require QoS support are critical to creating a great user experience. That implies premium real time apps that operators haven’t figured out how to charge for.
  • Mobile app discovery was seen as a critical issue, as apps are not indexed in app stores and can’t be easily found by potential users.
  • Ben said that getting visibility for the “right set of apps” is important. He suggested integration of app discovery into mobile search.
  • A directory to navigate apps will be a complex piece of software. It might have to take into account data sharing between apps.
  • The challenge of ‘app discovery’ across many platforms seems to be a throwback to the early days of the Internet – before website discovery was solved by Google (and other) search engines.
  • Anil pointed out the “duopoly” of Apple and Samsung causes most apps to be developed for their platforms (iOS and Android, respectively). So it is the apps for those two platforms that most need to be discovered.
  • Many customers are writing their own apps which are more personalized and are inherently discovered.
  • Consumers have an inalienable right to privacy, but there are “trust issues” with app stores that maintain user profiles. Might personal information be used for app discovery, as it is now for “personal web searches?”

Moderator Raj Singh next asked, “Is HTML5 becoming a parallel mobile web?” He explained that HTML5 and the hybrid web/native model is what is being most adopted by app developers. For example, the use of HTML5 for the front-end of the app, but wrapping it as a native app (like the LinkedIn Mobile app).  Ben said that HTML5 is the direction we’re all headed, but neither he nor any of the panelists were specific on its forthcoming role in mobile apps or mobile platform development.  An audience member and panelist were debating if future mobile web apps would be based on HTML5.  While no one denied that, there were no predictions on how long it might take.

Raj continued:  To what extent is the Apple-Samsung duopoly driving the mobile ecosystem and user choice? What platforms and device makers will be viable in the future?

  • Matt strongly believes it’s all about software, which determines gross margins.
  • Ben stated that “Android market fragmentation (multiple types of smart phones from different makers) is driving app developers to the Windows Phone platform.
  • Anil was bullish on Windows Phone. “The new Windows Mobile is a great product. I’m optimistic it will succeed as a 3rd platform (mobile OS).”
  • Lars noted that mobile phones are still the world’s biggest distribution platform with an average one year replacement cycle for smart phones. Apple will ship 100M iPhones this year alone!
  • Anil divided the mobile device makers into 3 groups:  Iconic leaders – 1) Apple (especially with consumers) ; 2) Fast Followers-  Samsung, LG, HTC; and 3) Strategically handicapped- HP (Palm), Nokia, RIM.
  • Erik opined that there would be new types of mobile/ wireless devices for M2M communications, such as for use in home automation, security, and energy management systems.

Raj questioned the commercial success of mobile payments, especially using highly touted NFC technology. 

  • Matt said it all depends on Apple’s support (of embedded NFC and mobile payments) in its iPhones. 
  • Anil took a bearish view, citing too many different players involved in the mobile payments ecosystem (operators, handset makers, Visa & other credit/ debit card companies, banks, and app developers). All would have to use an integrated mobile payments system which doesn’t exist yet. 
  • Summing up, Raj told this author, “Once the mobile wallet system is figured out things may change, but the mobile billing  may continue to be problematic.”   Security was also seen as a critical issue for mobile payments

Raj asked if Amazon would be relevant in the “App Store universe?

  • Lars said he was bearish on 3rd party app stores (as Amazon’s would be). But he was bullish on enterprise app stores, presumably from 3rd parties.

Looking to the future of mobile markets………..

  • Matt said that Norwest had invested in mobile health related start-ups. 2% of global GDP is coming from mobile health and that number is growing.
  • Lars opined, “tons of innovation will come from VC backed mobile start-ups.”
  • Ben was very optimistic on personal wireless sensors, but time for this session ran out before he could elaborate.

Editors Note:  Part II of this article will cover Mobile Enterprise deployment issues as well as Mobile App Monetization and Social/mobile Gaming.

11 comments for “Highlights of TiECon2012 Mobile Sessions-Part 1: mobile operators, emerging trends, applications and opportunities

  1. June 1, 2012 at 3:59 pm

    Mobile payments is very broad and could include things like carrier billing to the mobile wallet (but is leaning more wallet depending on context as of recent)

    When I think of mobile wallet, I think of storage of credit card details w/ a merchant processor for the purchase of non-digital good either online or in-store.

    Carrier billing is premium-rate SMS or other for the purchase of digital goods (think purchasing of ringtones etc over SMS several yrs ago)…

    Yes, it’s a bit confusing b/c the terms are loaded and there are other billing approaches like Payfone (in-between)

    • June 3, 2012 at 7:08 pm

      Raj, Thanks a lot for your reply to distinguish mobile wallet from mobile payments. Many think they are the same thing,including Wikipedia!
      http://en.wikipedia.org/wiki/Mobile_payment
      Here’s one reasonable definition:
      Mobile payment, also referred to as mobile money, mobile banking, mobile money transfer, and mobile wallet generally refer to payment services operated under financial regulation and performed from or via a mobile device.

      Financial institutions and credit card companies as well as Internet companies such as Google and a number of mobile communication companies, such as mobile network operators and major telecommunications infrastructure and handset multinationals such as Ericsson have implemented mobile payment solutions.

      Mobile payment is an alternative payment method. Instead of paying with cash, check, or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hard goods such as:

      There are four primary models for mobile payments:

      Additionally there is a new emerging model from Haiti: direct carrier/bank co-operation.

      Mobile payment is being adopted all over the world in different ways
      http://mashable.com/follow/topics/mobile-payments/

  2. Anonymous
    May 31, 2012 at 2:47 pm

    Excellent article and most informative comments. As I understand it, mobile wallet using NFC embedded in a mobile device (e.g. smart phone) to make payments in lieu of a debit/credit card. Raj says “it’s broken.”

    Mobile payments seems to be a broader term, which encompases any on line payment or bill pay made on a mobile device (either via 3G/4G or WiFi).

    Is that correct?

  3. May 30, 2012 at 4:32 pm

    There may be a new kid on the app store block. While panelists at this session were not bullish on 3rd party app stores, Light Reading reports one is coming from a collection of wireless operators.

    Vodafone Leads Open Global App-Store Push

    “CSPs involved are AT&T Inc. (NYSE: T), Deutsche Telekom AG (NYSE: DT), Vodafone Group plc (NYSE: VOD), Verizon Wireless and Telefónica SA (NYSE: TEF). Could a cabal of telcom operators, sick of chasing Apple Inc. (Nasdaq: AAPL) and Google (Nasdaq: GOOG) in the applications market, finally start working together and act like the Internet companies they aspire to be? Well, we’ll see in September, when this joint, open apps effort is set to launch in beta format.”

    http://www.lightreading.com/document.asp?doc_id=221448&

    • May 31, 2012 at 7:34 am

      RE: carrier app stores, I doubt it – this is a model that is repeating itself and has occurred in the past. The primary challenge is that operators just can’t execute fast enough and so by the time they figure this out, it’ll already be behind in approach. To some degree it’s already happening w/ ISIS (the carrier wallet approach).

      • Anil Gupta
        May 31, 2012 at 10:42 am

        Raj, Agree with your negative assessment of carrier app stores.

        But I don’t understand why you are quoted saying that billing for mobile payments is “problematic”? Billing is not an issue for Internet billing or physical credit/debit card billing, so why is mobile payments different?

        Great article with several on target comments! It’s great when the moderator replies to reader comments.

      • May 31, 2012 at 11:25 am

        Hi Anil,

        The context of that comment was w/ respect to the mobile wallet – it’s absolutely broken (but even carrier billing is broken, IMO but that’s a diff topic). There is a battle among the tech heavyweights and the operators themselves on who ultimately will own the users billing information and who will become the “merchant processor?” Operators would like you to buy physical goods via their cached CC and take a % much like what is happening in Japan. FB, Apple, Amazon, MSFT etc would like to also do this and of-course Visa, Paypal and others are in the mix – it’s a mess.

        All of this is still assuming someway to seamless purchase physical (and/or digital) goods online (via e-tailers like Amazon) and/or in-store. The bet is being made on NFC but the POS terminals w/ NFC are not yet enabled – let’s see how this all plays out…

      • May 31, 2012 at 11:39 am

        To reinforce Raj’s point, let me add a personal example. I just signed up our youth baseball’s Snack Shack for the Square service, so we can start accepting credit card payments. We could also access payments via mobile, although that is a secondary consideration at this point. My thinking is the hoped for 30% increase in sales will compensate for the 2.75% hit to the margin in terms of transaction fees.

        The thought never went through my head to consider a mobile operator for the merchant account. I did think about PayPal and Dwolla, but, since I had picked up the Square readers at CES, I figured Square was the least path of resistance to trialing credit card payments.

        If it works, Square will be positioned to get our mobile payment business as that develops; most likely the only way the mobile carriers would get it is by buying a Square or Dwolla or an eBay.

  4. May 30, 2012 at 12:09 am

    Thanks Alan for attending and reporting on this very important panel. One thing that is interesting is the privacy and security aspect of mobile. It seems that the mobile carriers must abide by a different set of rules compared to the app developers that ride on the mobile platforms when it comes to security and privacy.

    That is, they have the strict rules regarding the protection of CPNI (Customer Proprietary Network Information) and those rules are enforced with substantial fines. The mobile apps, whether social networking, casual gaming or some other “free” offering, prompt many people to voluntarily give away data that would never be released in a traditional telecom environment. This personal information currency is something that the mobile operators can’t take advantage of with the current rules.

    That the FCC is still serious about making sure mobile operators stay within the limits of the CPNI rules is evidence by yesterday’s announcement regarding the state of privacy and security of data stored on mobile devices:

    http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0525/DA-12-818A1.txt

  5. May 29, 2012 at 8:52 pm

    Thx Alan.

    I would add on the topic of OEMs, it’ll be real interesting to see if Apple decides to break their aspect ratio with a larger screen device of diff dimensions. This could really trigger the fragmentation on iOS that may force developers to make a choice. Maintaining aspect ratios is key and it’s something Android hasn’t done very well at all.

    Thx again for the write-up!

    Raj

    • May 29, 2012 at 9:47 pm

      Thanks Raj (mobile panel organizer/moderator) for your comment about Apple potentially introducing a larger screen on their iPad/iPhone.

      Today, at the All Things Digital Conference, CEO Tim Cook said that Apple would continue to innovate and hinted at big things ahead. “The juices are flowing,” he said. “We have some incredible things coming out.”

      When pressed about whether Apple would release different versions of the iPhone and iPad in different sizes, Mr. Cook said, “There is not a policy or commandment that thou shalt have one. If we find we can do more, great.”

      http://online.wsj.com/article/SB10001424052702303674004577435231354569596.html?mod=googlenews_wsj

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