This report looks at the state of the European mobile market and at how consumers are using mobile services. We have created different profiles looking at how consumers are using their mobile phones in the different countries.
Over the past two years, the introduction of the iPhone has changed the way consumers and brands perceive mobile phones. It acted as a marketing catalyst, raising awareness of smarter devices and conveying the idea that there are as many mobile services as there are consumers. Consumers will continue to shift their attitudes toward mobile phones — perceiving them not only as communication tools but also increasingly as entertaining and productive devices that can help them in their daily lives. More than 40% of European consumers are beginning to demonstrate sophisticated usage of mobile services.
We expect this to grow over time led by the two most sophisticated group of users (SuperConnecteds and Entertainers). They will change the general perception of mobile phones:
Many innovative start-ups have pioneered mobile social networking in the last few years: BuzzCity, Peperoni, Fring, Nimbuzz, eBuddy, Zyb, Plazes, Loopt, Foursquare and many others demonstrated the potential of the market.
In the last few months, a bunch of announcements clearly showed that the convergence between mobile and social computing is gaining traction and attracting the largest stakeholders:
The pace of innovation is accelerating in the mobile space like never before and opening up new opportunities. Mobile has the potentiel to bridge the digital and the real worlds. Not a day without a new mobile augmented reality service or application out on the market. Of course, that's still niche but it clearly demonstrates the potential of the mobile platform.
If you disagree or if you don't get my point, just watch the video below
This video is not brand new and has already been seen close to 500,000 times. The service is provided by an innovative start-up that offers a reality browser available for Android. However, these types of applications are flourishing. See for example the Métro Paris application here or more recently the Meilleursagents.com app here.
I bet the best mobile service at the next MWC conference in Barcelona will be a mobile augmented reality app or service. If you haven't submitted your service, the contest is now open at www.globalmobileawards.com.
At the end of this year, Forrester expects mobile Internet penetration to reach 17% in Western Europe — the same adoption rate for the PC Internet a decade ago. At that time, mobile phone penetration was still below the 40% threshold and mobile shops were opening at every high-street corner. Companies were only starting to launch their web presence and to anticipate the impact of the Web. Operator-branded mobile Internet solutions would only launch 3 years after and 3G in 2003/2004.
10 years after, the mobile Internet is reaching critical mass and a virtuous mobile Internet cycle is kicking off. Consumers who have a flat-rate data bundle spend more and more time on the Internet from their mobile phones, brands begin to launch their mobile Web presence to monetize these growing audiences and engage with their customers via more relevant mobile content and services, which in turn attracts more and more consumers to unlimited mobile Internet tariffs.
The current economic climate will lengthen handset renewal cycles, foster the development of low-cost offerings, and boost the uptake of SIM-only contracts. Operators are likely to postpone major investments in new networks such as 4G / Long-Term Evolution, despite early trials and commercialization in the Nordics. However, it will only slightly reduce the pace of growth for those elements that stimulate mobile Internet usage: 3.5G and Internet-centric mobile phones as well as all-you-can-eat data plans will be widely available in the next five years. That's the reason why Forrester expects mobile Internet to grow to 39% by the end of 2014. That's a lower end point than for the PC Internet in 2004, but the growth curve per se looks quite the same.
I published my first report on mobile social networks 2 years ago (see here) at a time when Facebook audience was "only" around 50 million unique monthly visitors. At that time MySpace was a paid-for and exclusive experience on Vodafone-Live and Bebo was about to launching a mobile version. Needless to say lots has happened in the last 2 years.
Numerous acquisitions and parternships took place between the likes of Facebook, MySpace, Bebo, Twitter, Hyves and with handset manufacturers / mobile operators. Several mobile-only communities (AirG, peperonity, itsmy.com, buzzcity...) have gained traction and there is plenty of innovation in that space. INQ generated lots of media coverage and interest by lauching its so-called "Facebook phone" and plans to launch new devices. I am not sure what the latest Facebook mobile stats are but not that long ago rougly 10% of the worldwide installed base of FB users had registered to the mobile version. Even more significantly, the GSMA announced a few months ago that UK mobile consumers who access Facebook via their mobile phone spend, on average, 24 minutes on the site daily, just shy of the 27.5 minutes that PC-based Internet users spend daily on Facebook; mobile users of Facebook average 3.3 visits per day versus 2.3 visits per day from PC users.
Hardly a week goes by without a press article or conference reporting how ubiquitous mobile payment services and their adoption are in Japan. Forrester decided to put some figures on the so-called Japanese mass-market reality and to understand why Japan is the declared leader in mobile contactless payment services. What lessons can others learn from the Japanese market and to what extent do they apply to Europe?
There are several reasons why Japan is ahead of the curve among which the role of Felica Networks in the value chain and the scale merchants could benefit from (Sony and DoCoMo invested several dozens of million euros to make sure that retailers and points of sale had the technology to read the chipsets embedded in mobile devices), the loosening of Japan's financial regulations (making it possible for non-banks to become financial services players), operators' role in paving the way for mass market adoption of mobile Internet and higher usage of mobile services (fostering the natural expansion of mobile payments).
Despite this, reality is that the mobile contactless market in Japan is only reaching critical mass, not mass-market adoption. In Europe, conditions differ quite a lot and even if Near-Field Technology is likely to play a key role in the future, the technology is only entering the pre-commercial era.
The success of Apple's iPhone has acted as a marketing catalyst and showcased the potential of the mobile platform.
Leading brands such as l'Oréal, Audi, Kraft, Bank of America and many others have embraced the trend and launched iPhone applications to engage with a high-profile audience, appear innovative or benefit from richer mobile media capabilities.
Many recent innovations in the mobile space are led by new entrants such as Apple or Google. However, let's be fair with telcos. They invest significant amounts of money in R&D and have very creative staff. There has been some skepticism in the industry on selected Orange services such as Pikeo, Djinngo (ex Bubbletop) or Soundtribes where Orange was trying to "reinvent the wheel" without partnering with the right Internet players. However, these services have never been really marketed and does not prevent strategic partnerships to be signed. Orange in particular has many Orange Labs worldwide and is driving innovation.
I saw recently some interesting demos of products and services to be launched by Orange:
The French Competition Council - the Conseil de la concurrence - ordered yesterday that Orange's iPhone exclusivity be immediately suspended, with the result that any French carrier (SFR and Orange) is now able to offer Apple's iPhone.
Orange will appeal the decision before the Court of Appeal in Paris, but in the meantime (it may take as long as 12/18 months to have a final decision) Orange's competitors will be able to sign distribution deals with Apple. SFR annnounced it had anyway already 45,000 unlocked iPhones active on its network. However, the time those agreements are in place, Bouygues and SFR cannot benefit from the Xmas sales period. After one year of its exclusive partnership, Orange announced that they will have sold over 150,000 first generation iPhones and over 450,000 3G iPhones. But beyond the idea of attracting high-end users, such an exclusive agreement was a key way for Orange to differentiate from competition, drive traffic to shops to cross-sell other Orange/France Telecom products and to nurture the brand (iPhone being all about "convergence").