The Mobile Industry in 2010 at a Glance
While in 2010 most industries continued to hear the echo of the Global Financial Crises, the mobile industry seemed to turn a deaf ear, and remained focused on expansion. What we have noticed is a trend for deeper smartphone penetration, growth in mobile internet usage, the invasion of Android OS, and an overall conversion of the mobile handset into a multi functional, multi tasking device.
1/ Smartphone penetration
Almost 78% of the U.S. population have a mobile phone subscription, with 25% of those sporting smartphones. According to a Nielsen report by the end of 2011 the number of smartphones in use will exceed the number of feature phones.
This trend is driven by the modern mobile device functionality, which offers users unprecedented added value and customization opportunities, and opens the doors for development of new industry business models. Device manufacturers’ strategic move to provide down-market low cost smartphones, and the multitude of cheaper data plan offers by communication service providers will both speed up the penetration of smartphones during the next few years.
2/ Mobile internet volume
Mobile data traffic continued to grow exponentially even after the historic cross over point in December 2009, when data first exceeded voice. The global mobile data has nearly tripled in the last year, growing over 10 times faster than voice.
A push for mobile internet growth was the expansion of 4G networks. U.S. wireless networks moved solidly into their fourth generation this year. Sprint launched the first 4G handsets this summer and Verizon Wireless rolled out its own 4G network in December.
3/ App business volume
Having earned their initial popularity as time-killers, apps are now quickly transforming into an ecosystem of tools for keeping consumers loyal and boosting sales. The added value brought by apps is noticed by both the business and the users.
By mid 2010 the global smartphone app market had reached $2.2 billion compared to $1.7 for the entire 2009. Forecasts predict that the worldwide smartphone app download market will reach $15 billion by 2013.
4/ Mobile ad business
The mobile advertising market has seen strong growth over the past 12 months. The launch of Apple’s iAd and the acquisition of AdMob by Google fast forwarded the mobile ad business, which is expected to have reached $1.5 billion for the U.S. market in 2010, with global revenues approaching $3.5 billion.
The global advertising expenditure on mobile delivery channels is expected to exceed $11 billion annually by 2015, as campaigns seek to capitalize on the personalized, targeted advertising and high levels of user engagement that mobile has to offer.
The advantages in mobile ad campaigns were demonstrated by advertisers such as Starbucks and L’Oreal which are making great use of location-based campaigns, where they geo-fence selected zones and push messages to customers entering those designated areas.
5/ New trends shaking the mobile environment
Augmented reality is a term for a live direct or indirect view of a physical real-world environment, whose elements are augmented by virtual computer-generated sensory input, such as sound or graphics. Definitely, a technology with huge potential and multiple applications in people’s lives. Word Lens iPhone app is a beautiful example of AR.
Mobile check-in is becoming more and more popular. Airlines have cashed in on the benefits of web check-in and quickly moved on to mobile. The location based service Foursquare is another exemplary mobile check-in application. What makes me positive that this technology will impact our future is the fact that even the “world’s third most populated country” – Facebook – announced in August its check-in service to connect people in real space.
Digital wallets is another thing our smartphones will become soon. AT&T, Verizon Wireless and T-Mobile USA teamed up on a contactless payment system enabling consumers to make retail purchases via smartphone. It didn’t take long for Visa to react and show that it is also working towards a contactless payments in partnership with Bank of America. The participation of these major players is a guarantee for interesting development in the near future.
6/ Mobile OS War
“Over 300,000 Android phones activated daily,” Andy Rubin tweeted in December.
By the end of Q3 Android was up 1,309% worldwide compared to the same period in 2009, taking over 43.6% of the US smartphone market and beating iPhone. Competition is a healthy motivator for development, but with phone makers such as Motorola, HTC and Samsung producing series of hit Android phones, it is going to be very tough for Apple to catch up. However, with 93 million Verizon users soon to be exposed to the iPhone offering, it’s too early to announce the winner.
Android contributed to the success of many of the flagship smartphones we saw last year but also undermined the smartphone manufacturers’ consumer loyalty by literary unifying the user experience across the board – an effect the manufacturers might start to feel in 2011.
The launch of the year is Microsoft’s OS – Windows Phone 7. MS, realizing WP7 is their last chance to enter the major league of mobile OS players, spent a marketing budget of over half a billion US dollars. In less than 2 months they’ve gained almost 200,000 active users, but it will take at least a year for any impact to show on the market share chart pie. We shouldn’t forget that it took about 2 years for Android to explode.
To summarize, I would say that this was really a dynamic year in the mobile industry. Smartphones plunged into the mainstream, giving millions of people the ability to browse the Internet, watch movies and stream music on the go. Ads are reaching their target right in front of the corner coffee shop. Apps are converting our phones into game rooms, barcode scanners, navigation tools, you name it.
Undoubtedly we are facing a challenging year with stronger completion among players, each after their piece of the pie. The good news is that there is always one winner, and this is the customer.