BARCELONA - I'm posting a good wrap-up for the MWC 08 a friend of mine passed on. It is by Dr. Mehmet Unsoy, Partner at Cartagena Capital and offers a good overall view of this year' show:
"Mobile World Congress (MWC) 2008 (aka 3GSM) was held for the third time in Barcelona, Spain, during Feb 11-14, 2008. Organizers claimed that there was a slight increase in the attendance (expected to be over 50,000) and 1,600 companies exhibiting, compared to 1,300 last year. But most of us felt that the attendance was about the same or even slightly lower, maybe because crowds and queues were better managed!
In this Industry Perspectives, I am giving my views and observations below. We also have Jane Zweig offering a rather different perspective on the overall direction of the industry [read article]. Finally, Alan Quayle, as a guest author, describes why he thinks the industry is at the crossroads [read article].
The major theme of this congress was mobile broadband. HSPA deployments have really taken off, with 174 commercial HSDPA deployments, 36 of them delivering 7.2 Mbps download speeds. They are targeting 42 Mbps and 12 Mbps for downlink and uplink respectively, using HSPA+/ HSPA Evolved by 2009. These are outstanding data rates! Also significant is that there are currently 420 HSPA enabled mobile devices, including the USB dongles, for laptops. Speaking of laptops, the mobile broadband Notebook competition was won by Dell and ECS, with HSPA embedded notebooks, at $550 price points, which is rather impressive! This HSPA enabled notebook market is estimated to be a $50B global market.
There were lots of talk, presentations and demonstrations on LTE. With the recent uptake of the HSPA based mobile broadband, there seems to be genuine pressure to realize LTE as early as possible. Ericsson, with their strong LTE commitment, demonstrated a first end-to-end phone call using LTE. There were long line-ups to see this Ericsson demo! Ericsson claims that they will have first commercial deployments of LTE by end of 2009. Nortel was also demonstrating LTE, with a target of commercial deployment with Verizon by end of 2009. However, these all sound awfully optimistic. Also, Alcatel-Lucent and NEC announced a major partnership to jointly develop LTE, but a few people I talked to were quite skeptical of such partnerships!
WiMAX was a relatively low-key topic at this show with only a few high-profile demonstrations. Cisco was demonstrating their recently bought Navini gear, which targets primarily the developing markets. However, the most interesting were the discussions/presentations around the relative positioning of WiMAX Mobile and LTE. Several industry leaders, including Vodafone’s CEO Arun Sarin, pushed for LTE making room for WiMAX Mobile, as part of the TDD solution, thus, creating a convergence of WiMAX and LTE. One implication of this is that those operators that deploy WiMAX Mobile in the next 2-3 years, can evolve to be part of LTE by 2010 or later. However, this view is not shared by everyone. China Mobile is collaborating with Vodafone and Verizon on LTE trials, but seems to be pushing TD-SCDMA as the TDD portion of LTE.
A couple of very interesting WiMAX related developments were a “WiMAX on an SD card” by Mitsumi using Sequans chip, showing a high degree of integration and NXP’s dual-mode EDGE-WiMAX reference design. Both of these are important steps in launching WiMAX services. One of the topics we had touched on in a previous “Cartagena Industry Insights” was the possibility of mobile TV over WiMAX and at this congress UDcast announced a mobile TV platform for WiMAX with broadcast and multicast capabilities. Also interesting was the seamless WiMAX - Wi-Fi roaming/ hand-off demo by Alvarion, Comfone and Intel, showing the complementary positioning of these two technologies.
Huawei had an impressive presence at the congress this year with a recent string of European operator successes. I was particularly impressed with the emphasis on “IP transport infrastructure for mobile evolution” for mobile networks. With mobile broadband demanding significant bandwidth and networking, this looks like the right emphasis for Huawei and others.
I have observed a degree of maturing in the Femtocell companies understanding and responding to the requirements and challenges they are facing. Even though I had been somewhat critical of the Femtocell companies in the recent past, I think they are developing capabilities and solutions to tackle interference issues, remote management, as well as bringing down the unit cost. Several young companies worth to mention here are ip.access, picoChip and Ubiquisys. Also, some companies are looking at merging Femtocell units with other devices at home, such as residential or home gateways.
On the mobile device side, the first surprise of the congress was Microsoft’s announcement of the Danger acquisition for $160M. Lots of people expressed puzzlement around this acquisition and various theories around the motivation of Microsoft and whether it has anything to do with their intended Yahoo acquisition to compete more effectively with Google/ Android/ gPhone, etc. This probably is a separate topic of discussion!
Apple was not really present at the congress, but their presence was felt enormously. First, there were numerous (hundreds of) new handsets announced and most of them with significantly improved “user experience”, some with a touch screen, obviously showing some iPhone and iTouch influence. Nokia announced their Touch UI, but are not sure when it will be available on handsets. SonyEricsson had their first Windows Mobile handset, Xperia X1, which looked superb! It has 9 panels or screens, each catering for different environments. It is not tied to Windows and they could change it to another OS later! With numerous handset announcements, it seems that Sony Ericsson is trying very hard to improve their market-share, currently #4 with 8.8%, after Nokia (38.1%), Samsung (14.5%) and Motorola (13.1%). Also there were lots of rumors about Motorola and what they may do with their handset division.
Incidentally Nokia had one very impressive handset announced, the N96, with 5 Megapixel camera, recording videos at 30 fps, supporting MPEG-4 as well as DVB-H, 16GB memory and microSD slot. But you cannot get your hands on it until Q3 and it would cost you around 550 EUR.
LiMo Foundation announced the first wave of 18 new phones that are Mobile Linux based as well as their SDK strategy. These include handsets from LG, Samsung, Motorola, NEC and Panasonic and some prototypes from Aplix and PurpleLabs. This shows that LiMo can compete effectively with Google’s recently announced Open Handset Alliance (OHA), in offering an open operating system for mobile handsets that is hardware independent. LiMo Foundation needs to be taken more seriously thanks to increased membership recently including companies such as Access, AMD, Broadcom, Ericsson, Huawei, McAfee, Montavista, NXP, Open Plug, Softbank, ST, Trolltech and WindRiver.
Several OHA members such as Qualcomm, TI, ARM, NEC, ST and WindRiver also demonstrated some very early versions of the Android prototype platform. However, it will be late 2008 before any mobile handsets be available with such a platform. It is interesting to note that companies like Wind River are in both LiMo and OHA camps!
With the growing number of video and TV capable handsets, mobile TV is reaching a degree of maturity. There were solutions delivering mobile TV over 3G, HSPA, DVB-H, MediaFlo as well as over Wi-Fi. Alcatel-Lucent demonstrated the new satellite based DVB-HS system, together with DiBcom, Eutelsat, Sagem, SES Astra, TeamCast and UDcast. It was announced that Japan has reached the 20 Million mobile TV phone mark this month after only 2 years in service. New ABI research report predicts that by 2012 the mobile TV market will boast nearly half a billion subscribers. The growth of 3G/ HSPA will be a major factor in this growth.
Greening of the wireless industry was yet another theme at the congress. Most of the emphasis was in base-stations that used less power, less space, etc. But also, recycling of mobiles and batteries in China, for example, was noteworthy. Greening is particularly important since several countries are experiencing significant mobile penetration growth. China now has over 525M subs, with 39% penetration and 18% y/y growth, the USA has 254M subs, with 87% penetration, India has 237M subs, with 21% penetration and a whooping 60% y/y growth and Russia has 169M subs, with 120% penetration!! Interestingly enough, we observe several European countries with over 100% penetration, led by Italy (154%), followed by U.K. (122%) and Germany (117%).
Even though China and India attract lots of attention as key developing markets, the African market is experiencing the highest rate of growth these days. There are about 270M subs today in various African countries and most countries are experiencing over 60% annual growth with blended ARPU being around 10 EUR. We should expect all sorts of new solutions targeting such a growth market, but with a low ARPU.
Mobile advertising was still a hot topic in this show, with over 30 companies (maybe more!) offering various solutions, some end-to-end, some partial, for this potentially explosive area. The global advertising market is considered to be about $640B and there is lots of debate as to what percentage of this can be expected to be shifted to mobile. Also, if X% is shifted from print or on-line to the mobile medium, it would be worth substantially more due to better targeting and higher response rates. Analysts estimate the mobile ad market as $12B by 2011. Several industry collaborations also announced during this congress, showing that the mobile operators are taking this more seriously and are attempting to regulate themselves. They are starting to realize that rich media mobile content delivery will have to rely on an advertising based business model as opposed to a simple subscription based model if it is going to succeed.
Social Networking was also a hot topic at the congress, with Facebook’s and MySpace’s initiatives in the mobile area attracting lots of attention. But also RIM’s co-CEO Jim Balsillie emphasized that Blackberry’s future depends on business-oriented social networking. Mobile phones are becoming so much better tool for generating user generated content (UGC). Thus, mobile becomes such an important part of social networking. Analysts are expecting 600 Million active users for mobile social networks by 2012.
Mobile VoIP deployments have taken off partially due to mobile broadband deployments around the globe. Most of the mobile VoIP deployments are said to be mobile operator-friendly, i.e. conducted in collaboration with the mobile operators. VCC (Voice Call Continuity) solutions are now available for hand-offs between mobile and Wi-Fi networks. There is also a strong element of social networking in the XoIP service deployments.
Increased penetration of GPS integrated handsets is now enabling a series of interesting Location Based Services. Nokia and Navteq had various product announcements. Yahoo announced oneConnect that alerts you when friends are in town. It also aggregates social network connections from Facebook, MySpace, etc. and delivers your email!
There were a lot of interesting companies worth to mention at the show, but I can only highlight a few of them:
- Aepona – won the best service delivery platform award
- GestureTek – most innovative application with its gesture recognition technology for mobile gaming and navigational software
- Valimo Wireless – mobile signature and user authentication and one of the finalists for most innovative consumer applications
- myGamma.com – best mobile social networking service
Finally, the Mobile World Congress is becoming less and less mobile operator centric. However, there is a need for further openness. Google, Apple and other internet players are at the gate and they should be invited and given a more active role at the future MWCs."