[Report] HTML5 and what it means for the mobile industry

[HTML5 has been tipped to be a game-changer, with some predictiving it will take over most mobile platforms. But what is its real impact to the mobile industry? VisionMobile Research Director Andreas Constantinou evaluates HTML5 vs apps and what it means for the mobile industry as part of our newly released report – free copy here]

VisionMobile- HTML5 and what it means for the mobile industry

Background: Web vs. apps

In today’s world of apps, the web seems to have taken a seat in the back row. But many industry observers are predicting a comeback with HTML5 advancements, the proliferation of smartphones and ubiquitous backing by both telcos and Internet players. Is the web as we know it about to change?

First things first: what is the web?

Firstly, the web is a language for creating interactive, navigable content, which consists of three main parts: HTML (the language used to define the static text and images), CSS (the language defining styling and presentational elements) and JavaScript (the language describing the interactions and animations).

Secondly, the web is a paradigm for open, unfettered access to content that is not controlled by any single entity. In the era where apps distribution is controlled by single vendors like Apple and Google, the web seems to challenge the status quo.

There are many ways in which web pages differ from mobile apps today, as shown in the next table.

Differences between apps and web

From web 1.0 to the mobile web

The web has gone through two major phases: Web 1.0 and Web 2.0.

Web 1.0 was the era of the dumb terminals and static web pages. The first generation of the web assumed all intelligence was in the network; the device had to issue a simple request to fetch a page and then present it on the screen.

Web 2.0 was is the era of smarter terminals and interactive pages. This second generation was designed around the ‘read-write web’ where the user is not just a consumer but also an editor, curator and producer of content. Web 2.0 helped create today’s phenomena of Wikipedia, Facebook, Twitter, blogs and nano-publishing.

Despite starting off as an outsider to the web, the mobile industry has been rapidly catching up since the early WAP days. WebKit, the Apple-born browser engine is now the common ‘circuitry’ behind more than 500 million devices shipped to Q1 2011, by all major smartphone vendors. Opera, the mobile browser vendor, counts over 100 million monthly active users on its Mobile and Mini browsers.

In the manufacturer camp, smartphones are expected to reach well into sub-$100 retail price points in 2011. In the operator camp, content delivery optimization solutions from the likes of ByteMobile, Openwave, and Ortiva Wireless are being deployed across tier-1 operators, facilitating efficient use of the network while browsing the web.

Mobile industry initiatives such as the Wholesale Applications Community (WAC) are pushing the envelope for web applications (also known as widgets) while EU-funded initiatives like webinos aim to use the web as a medium for deploying applications across mobile, PC, TV and automotive screens.

HTML5 as a technology change

The hype surrounding HTML5 has peaked in 2011. HTML5 promises to push the capabilities of web applications to the point of making web apps as engaging as Flash applications and as integrated with the device as mobile applications. HTML5 introduces several technology improvements in these domains by adding off-line storage, 2D graphics capabilities, video/audio streaming, geo-location, access to the phone’s camera and sensors, as well as user interface tools.

This next generation of web languages in the form of HTML5 is being standardized by the W3C and the WHAT working group who are driving forward web apps as equal citizens to mobile applications. The W3C consists of 51 member organizations, over 440 participants with strong backing from Google, Apple, Opera, IBM, Microsoft, and Mozilla. In parallel the WHAT working group is working closely with Mozilla, Opera and WebKit who are implementing and testing the latest browser features.

Yet HTML5 is still work in progress and even standards bodies show fragmented approaches to HTML5 completion. The W3C expects official completion of the HTML5 set of standards in 2014. In parallel, WHAT has taken a different approach to completion and is now working on ‘HTML’ as a continually evolving set of specifications.

Despite the adoption of the WebKit engine as a de-facto standard, HTML5 implementation on mobile devices is both fragmented and incomplete.

Independent studies by quirksmode.org and NetBiscuits have shown that every mobile WebKit implementation is slightly different. In addition, the leading smartphone platforms show inadequate HTML5 support; iOS, BlackBerry OS and Android devices show partial HTML5 support (at best 2 our of 3 HTML5 features supported), while Symbian and Windows Phone devices are lagging further behind.

Much like history has shown with the PC browser wars of the 1990’s and the Java ME fragmentation of the 2000’s, mobile browser fragmentation in 2010’s will be driven by the need to differentiate (’embrace and extend’), and the varying speeds among vendors in implementing the latest WebKit engine.

What about HTML5 app stores? Already a number of start-ups such as OpenAppMkt, Openspace and Zeewe have proposed app stores focused on web apps. The key advantages of HTML5 app stores are cross-device portability and a buy-once-use- everywhere application model.

Unfortunately, supply does not always imply demand; HTML5 app stores can’t deliver a business model change if demand is not there, for three reasons. Firstly, users care about availability of popular content (see Angry Birds, Skype and Facebook) most of which are not available as web apps often due to HTML technology limitations. Secondly, users care about choosing among hundreds of thousands of apps, which is currently a 2-horse race (Apple and Google) with the web lagging far behind in terms of number of apps. Thirdly, users are becoming loyal to their smartphone platform (Android, iOS or BlackBerry) where the native app store dominates.

How to compete in a software world

HTML5 introduces several technology innovations. However HTML5 remains a technology change that is not designed to solve discovery, distribution or monetisation problems – in other words it is not designed to change the business model.

What *will* be changing the business model of the web are the innovations introduced in the apps economy – where content is created with semantic tagging (description, category, user ratings, etc), discovered via web stores (much like app stores), distributed within walled gardens (much like Facebook), and monetised through micro-payments (much like apps). We call this web 3.0 – and we expand on its implications in the full research paper.

The question is: how can the mobile industry leverage on the web, and the native platforms that dominate the apps world?  The trick here is not to compete, but to leverage on the network effects of the Apple, Google and Microsoft platforms where handset OEMs or network operators can position themselves as a new generation of over-the-top players.

For example, operators can act as the matchmakers between developers and end-users by helping developers get the right apps in front of the right users through techniques such as featured placements, social- graph-based recommendations and segment targeting. Similarly, handset OEMs can act as on-device retailers, connecting the developers to the right audience, in the right region, through white space across the handset real-estate.

This is also where we believe WAC has the best chances of success but helping operators reposition as over-the-top players on top of the Android and Apple app stores – that is by helping developers reach out to users with ubiquitous billing, quality assurance, content curation, local content deals, privacy and security assurance, and help extend app stores away from the virtual and into the physical retail space.

In parallel, network operators and handset OEMs can help push the web into a viable alternative for native platforms in many ways. They can push the development of WebKit towards better bandwidth management, and closer integration with hardware multimedia acceleration. Moreover, the mobile industry can sponsor the development of better cross-platform developer tools that allow HTML and JavaScript developers to target multiple native platforms and mass-market browsers.

No matter how telecoms players decide to compete in the software world, they need to adopt ‘agile’ development methods and move at software speeds to catch-up the platform players in controlling the last mile to the consumer.

One thing is certain; the future of connected web and devices is going to surprise us – much like how applications turned telecoms economics upside down. Like Bill Gates once famously said “we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten”.

Web is going to be a game changer, but not in the way we expect it.

Read our full report for more.

– Andreas
you should follow me on Twitter: @andreascon

[Report] The Netphone: behind the first WAC phone

[The Netphone is a bold attempt by Smart Communications – one of the top 20 MNOs globally – to bring telco services to the mass market But will the Netphone’s blend of WAC and Android succeed?  Research Director Andreas Constantinou goes behind the scenes into the Netphone project to find out, as part of our latest case study, sponsored by Red Bend Software – click here for a free download]

VisionMobile-The Netphone: behind the first WAC phone

Smart Communications: sophisticated services in an unsophisticated market

Smart Communications – the telco behind the first WAC phone – has over 50% market share in the Philippines with 46M wireless subscriptions, which puts them within the top-20 operators globally.

Smart has a record of service innovation that is akin to what operators in North America and Europe have achieved in more developed markets. Smart has one of the widest service portfolios among global mobile operators, including mobile payments, mobile banking, money transfer, mobile streaming TV, maps, push email and propositions for niche segments (e.g. MomsClub). Data services currently make up just over 50% of Smart revenues, as of Q1 2011, with the majority coming from the one billion SMS texts being sent each day. Smart Money, a service that allows users to pay for goods by transferring money from their bank account, was launched in 2001, and counts more than 8.5 million customers.

However, like many operators in developing economies, Smart is in a low-ARPU, pre-paid market. Some 99% of Smart subscriptions are pre-paid, with the blended, pre-paid ARPU reported at just 169 pesos ($3.9 USD) in Q1 2011.

Faced with decreasing ARPU in a competitive market, Smart has embarked on a handset-led strategy to increase its revenues by bringing over-the-top services to the mass market of pre-paid customers.

An Introduction to Netphone: The first WAC phone

The Smart Netphone presents a new series of mobile phones and tablets developed by Smart, aimed at bringing smart devices and services to the mass market.

The first device – expected to launch in July, 2011 – is a rebranded, revamped ZTE Blade. This is the same handset that has been rebranded by Orange UK as the San Francisco and priced at 99 GBP (around $160) without contract, and not dissimilar to the Vodafone Smart handset by Huawei priced at 90 EUR (around $130).

Netphone

Although Smart has not announced pricing, we expect its Netphones to target image-conscious, affluent Filipinos willing to spend an estimated $120-$140.

The Netphone comes with a suite of widget-like applications on the phone’s home screen that provide access to Smart and partner services:

Balance Check for prepaid users, which comprise 99% of Smart’s subscription base

Unified Chat, allowing users to message their contacts with emoticons and video animations. Chat integrates with Yahoo Messenger and Facebook

Sender Pays Email, which follows the SMS cost paradigm, but adds richer emoticons and video expressions to the messages

Connected Address Book, which integrates the user’s address book with Gmail and Facebook contacts

Global Directory, which integrates local Yellow Pages, and lists all users who use the Netphone (subject to privacy settings)

Social radio, which lets users share an FM station with a friend and tune into it in parallel

Smart Money, a service that allows users to pay for goods directly from their bank account or credit card

Emergency app, which offers one button calling to a doctor or other contact that can be assigned by the user

Partner apps like Jollibee (the number one fast-food chain in the Philippines), which allows users to browse the food menu, check out special offers, and order and pay for food delivery, directly from their phone.

Behind the scenes: the making of Netphone

The Netphone is not just an experiment for Smart. It represents a major effort for the operator, with a team 300 staff developing the phone series over the last 18 months, together with an array of tens of partners across six countries.

As a phone series, the Netphone hits several firsts: it’s the first phone to be based on WAC widget specifications (see next section); it’s the first fully customized handset from a mobile operator in an emerging economy; and, along with the Orange San Francisco and Vodafone Smart, it’s one of the first attempts to sell smartphones to prepaid users.

The Netphone has been designed with tangible revenue goals. Besides increasing own service revenues for Smart, the Netphone generates revenues by enabling partner transactions. For example, Smart gets a percentage of the revenue from every Jollibee fast food delivery transaction.

Smart lined up several partners to realize the Netphone concept, including ZTE and Huawei (handsets), Qualcomm (Android chipset platform), IBM, Oracle, Huawei (back-end integration) and Red Bend Software (software management over the air).

According to Smart, a key design decision has been using a software update technology that allows the Netphone platform and applications to be updated continually over the air (OTA).

With the OTA update technology, Smart can minimize the runtime age of the WAC-based platform runtime, ensuring that its Netphone applications run on the latest version of the platform. This addresses a common challenge faced by mobile application developers, who must port new applications to older runtimes. For example, about 25% of active Android handsets run on platform versions that are more than 18 months out of date, according to Google data released in May 2011. Similarly, 20% of existing Apple 3GS devices had not yet been upgraded to the latest platform version two months after the introduction of iOS4, according to app analytics firm Localytics.

Building on WAC technology

The Netphone series includes the first phones based on specifications defined by the Wholesale Applications Community (WAC). Launched in February 2010, WAC is a cross-operator initiative aiming to develop a cross-device platform and app store framework to drive operator services. Since its foundation, WAC has amassed 34 operator members and 39 other partners, bringing in a total of over $10 million in annual funding. Smart has a seat on the board of directors of WAC, alongside Vodafone, AT&T, China Mobile, NTT DoCoMo and other major telcos. The Netphone represents an important breakthrough for an industry initiative that has been criticized for its slow device rollout.

For Smart, WAC represents an industry-endorsed software platform on top of which its partners can build HTML-based applications (also known as widgets). Moreover, widgets are familiar to a broad base of web developers, who are accustomed to HTML or JavaScript development.

On top of the WAC widget specifications, Smart has layered its Looking Glass, a device and network technology umbrella that implements the array of Smart services on the Netphone.

On the device side, Looking Glass includes technology that WAC does not yet cover, such as over-the-air software updating (based on OMA DM SCOMO standard) and additional access into device capabilities like FM radio. On the network side, the Looking Glass technology umbrella provides access into Smart’s services, such as connected address book, advanced messaging, email integration, location-based services and Smart Money. Smart’s network APIs extend the GSMA One API specifications by adding XMPP for advanced messaging, billing & payment, and SIM-encrypted (DUKPT) transactions.

The agile telco: What other operators can learn from Smart

Many telcos have ventured into the world of handset software to deliver their own services and differentiated user experience. The most well-known examples are Vodafone (Live!, VFX, VSCL, 360), Orange, Verizon and, of course, DoCoMo. Smart also has had a tradition of developing services in-house, including Smart Money and its own airtime pre-loading solution.

Yet, Smart has taken a different approach from most operators. That approach offers three important lessons for the operator community.

Short tail. First, rather than deploying own-brand services exclusively, the operator has focused squarely on business partners with established consumer brands. It has allowed brands to deliver local consumer differentiation, and to share revenue on transactions. In so doing, it has provided brands with an additional channel to consumers.

Agile development. Second, the operator has used an agile development process. Rather than set specifications in stone at the beginning of the project, Smart’s featured Netphone applications have been iterating continually through a cycle of development, testing and user feedback. Moreover, rather than use the traditional RFI/RFQ ‘waterfall’ software procurement process, Smart has established joint operational and R&D teams with its many suppliers for Netphone, and has adapted the software specifications during the course of the Netphone project.

The project has already cycled through four iterations, averaging once every 3 months. Another iteration is planned before launch. “An RFP or waterfall development process clearly wouldn’t work here,” comments Ibasco, who has been a key proponent of the Netphone project since its inception.

Ongoing updates. Third, the over-the-air software update mechanism allows Smart to deploy new features and updates throughout the lifetime of the device. It also allows Smart to extend its addressable market for new services to the entire base of deployed Netphones, not just the most recent line-up of handsets shipped.

The future of the Netphone

Initial rollout goals are modest, with Smart planning to sell 200,000 Netphones by the end of 2011. Assuming Smart can hit sub-$100 price points in early 2012, it has a chance to rapidly ramp up these volumes, and address a substantial portion of its 46M subscriptions base.

For now, the operator community is looking at the Smart initiative with anticipation; Netphone marks the latest telco attempt at innovating in the era of software, by building on both the telco (WAC) and software (Android) worlds.

Read the full case study and tell us what you think.

– Andreas

[Survey] Developer Economics 2011: The evolution of app development

[Developer Economics 2011 is here! As we launch our new survey on all things developer-related, Marketing Manager Matos Kapetanakis looks back at the 2010 report and examines the major events that have shaped mobile development in the past 6 months]

VisionMobile - Developer Economics 2011

The evolution of Developer Economics
Last July we published the definitive mobile developer research report: Developer Economics 2010, dubbed by TechCruch as “one of the most profound…to date”. Our report delved into all aspects of mobile application development, across a sample of 400+ developers segmented into eight major platforms.

We’ve just launched the follow-up to this research report: Developer Economics 2011, once again made possible thanks to BlueVia, the global developer platform from Telefonica that helps developers take apps, web services and ideas to market. Our goal is to see how the dynamics of the developer world have changed since early 2010 and to provide more insights into app marketing, monetization and many other factors.

Join the survey or help spread the word! This year we ‘ve also secured a prize for each of the first 400 developers; 10 hours free testing time on DeviceAnywhere’s 2000+ handsets. UPDATE: Thanks to overwhelming support, all 400 free testing time prizes have been awarded by DeviceAnywhere. Of course, the $1,500 Amazon voucher is still up for grabs!

Major shakeups of the mobile industry for H2 2010
So, what’s changed since our 2010 research? The mobile industry is an ever-evolving landcape. In the past 6 months we have seen the Symbian Foundation close shop, with Nokia hoping that the as-yet untested MeeGo project will carry their smartphone banner. We have also seen the stellar rise of Android, zooming past Apple’s iOS and BlackBerry and becoming the no2 smartphone platform behind Symbian.

In the handset OEM arena, we have seen more shakeups in 2010 alone than in the 10 years preceding it. Apple and RIM have overtaken some of the traditional handset OEM powers (Sony Ericsson, Motorola, LG) and claimed a spot in the top 5. According to some estimates, ZTE could join them soon.

Moving forward, Developer Economics 2011 is looking at how the key metrics of mobile development have changed in the last year.

The migration of developer mindshare
One of the major findings of our 2010 report was the migration of developer mindshare away from the ‘old guard’, i.e. Symbian, BlackBerry and Java, towards the new powers of the realm – iOS and Android. According to our research, nearly 60% of the 400+ respondents had developed apps on Android. Apple’s iOS took second place, with more than 50% of respondents having a go at it, with Java ME following third.

In our Developer Economics 2011 research, we’ll be asking participants which platforms they’re currently targeting, which ones they plan on targeting and which ones they’re abandoning.

So, what’s changed since then? Well, if anything, the gap between Android and iOS and the rest of the platforms has grown even larger. The Apple App Store carries more than 300 thousand apps, while recent estimates place the number of apps in Android Market at around 130 thousand.

While Nokia has been spending considerable effort on the Ovi Store and increased its popularity with consumers and developers alike, they still have a long way to go to catch up with the two app-dispensing behemoths.

Why do developers head towards iOS and Android? Our Developer Economics 2010 analysis showed that Apple offers a platform that is relatively easy to master and using which a developer can design great UIs. They also have the largest app store and although the certification problem is an issue for some,  porting and fragmentation are not a challenge;. Android, on the other hand, has been gaining momentum across all fields, storming its competitors’ key market – the US. Of course, Android’s many fragmentation issues are often overlooked in the face of many handset OEMs’ dependency on the platform.

The disparity between handset sales and available apps

Our Developer Economics 2010 research uncovered a disparity between the number of devices sold for each platform and the number of available apps. One would expect the platforms with the highest market penetration to dominate in terms of apps, but that couldn’t be further from the truth.

Taking 3Q10 as a reference, it’s easy to see that the two platforms with the lowest penetration, iOS and Android, have the highest number of available apps.

On the opposite side of the spectrum, while Java ME and Flash Lite have the greatest market penetration by far, they can scarcely measure up to the newer platforms when it comes to app volumes.

In Q4, the contrast is even sharper. Both Android and iOS stores have grown by almost 100 thousand apps apiece. Windows Phone has shown an admirable growth, reaching 4 thousand apps in just two months, although it still has a long way to go before becoming truly a threat to incumbents.

Monetization and revenue expectations

In Developer Economics 2010, we asked developers how they felt about the revenues they’re receiving from selling their apps. Almost one in four respondents reported poor revenues, while only 5% reported revenues exceeding their expectations.

VisionMobile - Developer Economics 2010 - revenue expectations

While there has been a boom of app stores, that’s not necessarily a blessing for developers. Most developers face a discoverability issues, having their apps buried under thousands of other apps. Like one developer said in our previous research “It’s like going to a record store with 200,000 CDs. You ‘ll only look at the top-10″.

What options are there for developers? One option is to adopt a multiple storefront strategy, as well as to tailor your monetization model to specific app stores. As the CEO of Rovio, creator of the prodigious Angry Birds app, noted: “Free is the way to go with Android. Nobody has been successful selling content on Android”.

Developing apps in 2011
Care to see how the apps world has changed in the last year? Stay tuned for Developer Economics 2011, where we delve into app development, monetization, distribution, retailing, porting and fragmentation issues among many others.

Mobile developer? Join the survey and have your say.


Bringing the 'social' out of the operator walled gardens

[Mobile services have long been a carefully guarded commodity, kept within the ‘walled gardens’ of network operators. But as innovation moves to the software and social era, operators need to adapt. Guest author Avner Mor discusses how networks are inherently social and why they should open their walled gardens to developers]

Bringing the 'social' out of the operator walled gardens

A ‘walled garden’ is the term aptly applied to the last decade of mobile operator services. And Facebook is the generic name aptly applied to the social network revolution of our times.

Wikipedia defines ‘walled gardens’ as referring “to a carrier’s or service provider’s control over applications, content, and media on platforms … and restriction of convenient access to non-approved applications or content”. This has been the common sense approach to operator strategies; build high walls to protect your revenues – which by now we know is becoming irrelevant. Mobile operators are facing market saturation, declining ARPU, higher subscriber acquisition costs (see iPhone), fierce regional competition and viable threats of being replaced by the over-the-top players. In 2009 alone, global operator ARPU fell by 7.3% year-on-year and is forecasted to further decline around 10% y-o-y  according to Strategy Analytics. How come operators – having a ‘social’ network at their very core – have been steadily declining, whereas Facebook has risen to a 600 million user, $35B valuation business in just 7 years? Let’s take a step back.

[poll id=”9″]

2010 will probably be known as the year where mobile service innovation has moved squarely to the software domain. Think about the 100,000s of applications against the 10s of operator services launched in the last 2 years.

To compete in this software world, operators/carriers need to leverage their network capabilities to compete with the over-the-top players. For example, think of a voice application that automatically switches to taking a text or voicemail if it knows the other user is busy. Or a service provider in the travel business that can target their Java app and SMS campaign to users who travel abroad frequently. Or web pages that feature a 1-click-buy based on keying in your mobile phone number. Or a “where are my friends” service, where you opt-in to a friends location request no matter what phone you ‘re using. Or travel recommendations where a virtual concierge suggests places to visit in your holiday based on where your friends have been.

Such innovation has shunned the mobile world because network operators have adopted the walled garden business model of building a supermarket with their own branded goods – rather than a shelf (a platform) for third party goods that leverages on the social aspects of the platform. To compete in a world where innovation is defined in software and social, operators need to become a platform – and compete over the top, not in the network.

A platform business model is about leveraging operators’ underutilised, walled network assets, taking a cut from the delivery of innovative services, in the same way that Apple takes a cut from the delivery of mobile apps or Facebook takes a cut out of ad delivery. It’s not just operators that are playing in this developer game – it’s handset vendors investing in developer programs and app stores, online brands opening their assets to developers (from the BBC to Facebook) and Digital TV operators exploring methods to open STB, EPG and DVR channels to developers. Yet operators are the most ubiquitous and most social players of them all.

Leveraging the social side of the network

Networks hold lucrative assets within their walls including voice, messaging, location, presence, user authentication, billing – plus social graph, user profile and preferences. Take location for example; despite wide penetration of GPS receivers in handsets, network-based location covers any device, works indoors, and is particularly suited to emerging markets.

More importantly, mobile networks hole a treasure trove of information about its users; based a few key information like age bracket, ARPU bracket, address region, roaming characteristics and device model which are provided in an opt-in model, one can deliver better search results, ads or campaign targeting. Think about how restaurant recommendations can automagically cater to your spending habits, taste for international cuisines and social lifestyle – an app that knows you from day one.

There are tons more of examples where network APIs can enable unique applications. Yet, when developers try to connect their app to an operator network they experience barriers and restrictions, such as technology fragmentation, long and expensive technical integration, tedious commercial engagements, long time to payment, plus distribution challenges. What’s worse, developers need to engage and integrate separately with each operator. All of these factors hinder the vast majority of developer innovation and essentially diminish the operator ability to be the center of innovation gravity.

Many infrastructure vendors have jumped into the opportunity to connect operator networks to developers:

– Alcatel Lucent – A dominant SDP provider, extended a hosted ‘OpenAPI’ service for developers, providing Consent Management and  ‘LBS API’

– Ericsson – through their ‘Ericsson Labs’ initiative, the SDP provider offers a broad ‘Maps & Positioning’ API set: web & mobile maps, 3D maps, Cell-id look-up (with its own worldwide cell-id database) , operator based  cell-id and  consent management . Ericsson is currently working with operators in Sweden and Norway.

– Amdocs –  an OSS/BSS leader moving into positioning as an open mobile service providers network to 3rd parties: “service providers have the opportunity to drive new revenues by monetizing their unique assets – networks, customer information, charging, billing and customer care…”

– Huawei – An emerging market player builds its position by partnering America Movil and Telefonica in LATAM. Telefonica has completed in 2009 the deployment of Huawei’s openness platform across 13 Latin American countries

Social cloud APIs

Yet such efforts are limited to single-operator deployments. In addition, they have limited developer outreach potential as many these infrastructure vendors stem from the network, not the software world.

The logical next step is a single, cloud-based network API platform across multiple operators, spanning not just regions and multiple screens, but the entire application lifecycle: develop – deploy – discover – monetize. This network API cloud paradigm is essentially a 4-sided platform connecting users (who discover and consume services), developers (who innovate and create services), the applications themselves and the developer program partners (with the tools and technology, go-to-market, support and community assets). Naturally, a multi-operator paradigm needs to support variable access policies for operator assets, including access to network assets, charging subscribers and accessing user info.

Such a developer-friendly cross-operator pilot program was announced recently in the form of WAC, the Wholesale Applications Community, a joint effort to create a standards based apps platform that operators can leverage to build their storefronts. Network API’s are also part of WAC, based on OneAPI, a Commercial pilot project aiming to establish a unified, developer-friendly API environment across operators. Aepona is the technology provider for the GSM Association’s “OneAPI” initiative.

So is WAC the answer? Operator alliances are essential to achieve this goal. Yet, historically we have seen internal complexity and operator competing agendas hinder effectiveness of these pilots. The missing piece is an infrastructure player that understands software innovation, developer programs and running telco-grade cloud infrastructure. A Facebook-like (software) player that can bring the Facebook out of the operator walled garden.

– Avner

[This article is dedicated with appreciation to the Telecom team at Microsoft Israel R&D center
Avner Mor has over 25 years of experience in senior management positions with leading Israeli hi-tech telecom companies and start-ups. In his last role, Mor served as the General Manager of Telecom Products at the Microsoft Israel R&D center.]

2010 in review: Under-the-radar trends at Mobile World Congress

[Following a week of frantic announcements and marketing hype at MWC 2010, VisionMobile’s Research Director, Andreas Constantinou looks at what really matters – the under-the-radar trends that will make the biggest impact in the next two years]


The annual Mobile World Congress, besides a circus frenzy of 49,000 people has also traditionally been a barometer of mobile industry trends. This year we look at the under-the-radar trends that may have gone unnoticed, but will make a major impact during 2010-11.

1. Building developer bridges
If there was a theme to this year’s Mobile World Congress it was Developers. This year’s App Planet show-in-a-show gathered 20,000 visitors, making the stands of LTE vendors and the CBoss showgirls look pale in comparison.

Imagine that. After years and years of efforts in ‘pushing’ the next-gen killer technology (on-device portals, Mobile TV, widgets, ..), the mobile industry is finally seeking inspiration beyond its own confines; at the software developers that will generate even more ‘apps for that’ and drive innovation that will actually pay for the bandwidth investments.

The race is on to grab the best mobile developers – and the mobile industry is spending big money on it. This year’s sponsors of mobile developer contests and events are not just platform providers or handset OEMs. Just look at the some of the sponsors of the WIP Jam developer event at MWC: Qualcomm, Alcatel Lucent, Ericsson, NAVTEQ, O2 Litmus, Oracle.

Developer mindshare is expensive as developers have to be attracted away from other platforms which they have invested in; and as such we would argue that the average DAC (developer acquisition cost) is much higher than the average SAC (subscriber acquisition cost). Thankfully there are plenty of marketing budgets to throw into the challenge. Palm is spending $1 million to build its own developer community in a dire effort to win back its once-thriving community of mobile developers.

It’s ironic given that it only took the mobile industry 20 years to learn what the software industry understood since the early 1990s; that the smartest people work for someone else, but they will gladly work for your platform if you give them the right tools and audience. And it’s most appropriate that this realisation is happening right now, as the two industries are coming together in the post-iPhone era.

One of the big announcements at this year’s MWC was the Wholesale Application Community (WAC), the new operator collaborative effort at connecting to developers. WAC is born out of the merge of two initiatives: OMTP’s BONDI (device API specs for securely accessing user information on the device) and the Joint Innovation Lab, JIL (which besides the hype has had delivered only a widget spec). WAC is an intent of operator collaboration, but one which yet needs to decide what it will be delivering.

The GSMA App Planet, WIP Jam, WAC and many other initiatives are trying to capitalise on one of the hottest, yet perhaps understated trends of 2010: building commercial bridges or matchmaking platforms between software developers and the mobile industry. Next question: what’s your platform’s DAC (developer acquisition cost)?

[shameless plug: at VisionMobile, we ‘re running the biggest mobile developer survey to date, spanning 400+ developers, 8 platforms and 35+ data points across the entire developer journey. Best of all, the results will be freely published thanks to the sponsorship by O2 Litmus]

2. Quantum leap in mobile devices
Industry pundits have been overoptimistic about the dominance of smartphones, time and time again.; but contrary to predictions, the smartphone market share has remained at circa 15-17% of sales as phone manufacturers have remained risk averse; Instead of porting high-cost, high-risk operating systems like Symbian and Windows Mobile on mass market phones, OEMs have preferred to patch their legacy low-risk RTOS platforms with high-end features (read touchscreen, widgets and the like) – see earlier analysis here.

Yet the mobile software map is about to change rather abruptly; not because of Android, but as chipset vendors make the leap to sub-40nm manufacturing. Chip cost plays a major role in handset BOM (bill of materials) and that cost is directly proportional to the surface area of the silicon (excluding royalty payments). With the move to sub-40 nm manufacturing processes, you can fit a GPU (graphical processing unit) and even ARM Cortex architectures within the same die size. This means that the smartphone BOM will reduce from $200 to $100 in only 2 years, based on our sources at chipset vendors – and implies that MeeGo, Symbian, Windows Mobile and Android can penetrate into a far large addressable market than was possible before.

Adobe is banking on this very trend, planning (hoping?) that Flash penetration will reach 50% of smartphones by 2010, or circa 150M devices sold per year. Similarly, Nokia sees revenue contributions from S40 handsets dwindle from around 55% in 2009 to 35% in 2011, replaced by MeeGo (circa 10%) and Symbian (circa 55%) – see slide from Nokia’s Industry Analyst event. This also goes to show Nokia’s continuing investment in Symbian, at a time when the future of the Symbian Foundation is shady.

Virtualisation technology is further accelerating the BOM reduction, by allowing the likes of Android and Symbian OSes to sit on the same CPU as the modem stack. OK Labs introduced off-the-shelf reference designs for virtualised Android and Symbian earler in 2009, while at MWC 2010 Virtualogix announced similar deals with ST Ericsson and Infineon. The third (and last!) virtualisation vendor, VMWare (who acquired Trango), is yet to make a similar move.

Last but not least, we are seeing new attempts at re-architecting low-cost smartphone software. Qualcomm is making a comeback with its BREW MP software positioning this as a feature-phone operating system and getting major commitments by AT&T. Kvaleberg (a little-known Norwegian engineering company) has productised its 10-years of feature phone integration know-how into Mimiria, a feature phone OS with a clean-room UI architecture that makes variant creation a swift job requiring only 2-3 engineers to customise. Myriad has announced an accelerated Dalvik implementation to speed up Android apps up to 3x, allowing those to run more comfortably in mass market designs.

3. Analytics everywhere
Another under-the-radar trend at MWC 2010 was analytics, which was making inroads into the feature set of products across the spectrum – from SIM cards and devices to network infrastructure solutions.

Application analytics is the only visible tip of of the iceberg for now, with analytics services available from Adobe, Apprupt, Bango, Distimo, Flurry (merged with PinchMedia), Localytics, Medialets, Mobclix and Motally. There is also plenty of innovation to be had here, with a startup (still in stealth mode) delivering design-time analytics on the type of applications and their use cases. Or another startup which is delivering personal TV program management, and monetising (among others) on the analytics on what TV programs users are watching, searching and sharing.

Moreover, analytics is slowly penetrating into operator networks for delivering smarter campaign management, subscriber analysis or network performance. There is a long list of vendor solutions here from Agilent, Airsage, Aito, CarrierIQ, Rewss, Umber Systems, Velocentm Wadaro and xTract among others. One related under-the-radar announcement was that from SIM manufacturer Giesecke & Devrient (G&D) who is launching a product for measuring network quality on the handset.

Taking analytic to the next level, the GSMA and comScore recently launched the Mobile Media Metrics product. This is the first census-level analytics product for measuring ad consumption and performance, starting with the UK market, which follows the lucrative business model of TV metrics.

Analytics is indeed the most underhyped trend, whose magnitude the industry will only realise in 5-10 years from now.

4. Mobile identity in the cloud
Cloud storage for personal data is ubiquitous on the Internet; Google Buzz, Facebook and Dropbox are perhaps the epitomy of this trend. The mobile industry has traditionally fallen behind, but is rapidly catching up in 2009-10 with the cloud-stored Windows Mobile UI, the social networking connectivity layer on the idle screen as seen in Microsoft’s One App, the socially-connected handsets from INQ Mobile, HTC and Motorola (Motoblur), and the 10+ solution vendors who offer addressbook syncing solutions (Colibria, Critical Path, Funambol, FusionOne, Gemalto, Miyowa, Newbay and many more).

We used to think of user data as migrating from the SIM card (the operator stronghold) to the handset (the OEM territory). Now the data is once again migrating away from the handset to the cloud, the home-turf of Internet players.

This is the next battlefield, in the landgrab to define the interfaces that determine access to our mobile identity. There are two camps competing here; the Internet players who have defined user data access standards (Google, Facebook and Twitter), versus the players who have defined mobile data access standards to date (network operators – see Vodafone 360 and handset OEMs – see Nokia Ovi).

This is one of the important battles that will determine who can reap the most profits out of user information by controlling the interfaces that connect them to the outside world (for background see Clayton Christensen’s thesis on the relationship between interfaces and profits). And it’s also what network operators should be rushing to standardise right now, in one of the last battles that will determine their smart-pipe vs bit-pipe future.

Comments welcome as always,

– Andreas