Mobile World Congress: some thoughts on day 1

It is difficult to say whether the number of delegates attending Mobile World Congress is lower than expected or than last year, but the Fira was this year again crowded with audiences from all over the world (circa 50,000 visitors from what I have read). Despite the rainy / chilly day, the mood is much better than last year where the economic recession casted its shadow on the show. Not that we're clearly seeing the end of it but simply because mobile is one of the most promising and disruptive innovative industries. After the good old days of 3GSM in Cannes and as this will be my seventh participation to MWC, I'd like to put today's announcements in the perspective of key changes that I have witnessed happening over the last few years:

  • The shift from hardware to software and services. MWC used to be the event where handset manufacturers spent millions in promoting their handsets' autumn/winter collections. This year, neither Nokia nor LG (respectively N1 and N3 in terms of global volume market share) had a booth. It does not prevent them to have bold ambitions: LG wants to significantly boost its smartphone produt portfolio and to sell 140M devices in 2010 while Nokia aims at selling 500M devices! It just is that differentiation increasingly comes from software and now includes the use of Internet and PCs. Otherwise, how to explain that the most commented announcements were Windows Phones 7 (see Charles Golvin take here), Samsung's BADA (its new proprietary OS), Nokia/Intel partnership on Linux (see Ian Fogg's view here) and availability of Android-based devices? This is representative of Nokia's own approach with OVI and its assumed challenge to become the leading provider of mobile solutions.
  • The move from the Western World to emerging countries. Years after years, I can see more and more delegates from the Far East and from Africa and the Middle East, making this event a truly global mobile event. Just before the event, the most significant news was Indian operator Bharti willingness to buy Zain's African assets for 8 bn euros. Expect more and more consolidation among operators in the coming years, not just global operators expanging their footprint where the growth is but also regional deals between operators in emerging countries. This is about scale and scope.
  • The need for operators to define a new role in the value chain. A few years ago, more operators had significant booths. Their role in the value chain needs to evolve under the pressure of new entrants but also because of new digital consumer behaviors. I presented at a client event this afternoon in front of an operator audience and had a chat with the head of strategy at a global operator. From both discussions, it seems to me operators do not have a clear view on their new revenue streams and business models. Can they really go for a platform play and monetize their networks as a service? Do they have the tools in place to monetize their golden mine: consumer behavioral knowledge? In this regard, the "Wholesale Applications Initiative" where a bunch of competing operators plan to partner to offer a global reach for developers to launch their applications looks more defensive to me. The announcement lack details yet but operators have a poor track record of collaborating. The Joint Innovation Lab (JIL)  consortium (with Vodafone, China Mobile, Softbank and Verizon) is part of this initiative but in this regard Vodafone seems to lead the pack in moving to a telco 2.0 model. Other operators, such as Orange, may question in the short future their bold positioning in the content business.
  • The move from acquisition to retention (in Western Europe at least). In emerging markets, there is still significant growth potential among new subscribers. In Western Europe, this is pretty much about keeping customers loyal and unleashing the potential of mobile services. In this regard, one of the most interesting announcements about Windows 7 today is Orange's partnership with Microsoft to offer a dedicated call center to help Orange customers use mobile services. Defining the right settings on your mobile phone might be easy for early adopters but it won't for the masses. Operators will even increasingly be able to charge a premium for optimized customer care offerings.
  • The growing interest from traditonal brands. I see more and more companies outisde of the telecom industry (banks, retailers, media comapnies, FMCG / CPG companies...) sending executives to better understand how they can make the most of mobile and anticipate innovation. In this regard, lots and lots of innovative solutions are being presented. There might be some hype around new solutions such as augmented reality but there are some truly interesting companies in that space (Layar for example won two well-deserved Mobile Premier Awards and announced a partneship with a handset manufacturer). I still believe the technology needs to improve (with real image / object recognition), consumer benefits and services needs to be added as well a more vibrant local advertising ecosystems. But still a good "waouh" effect when well executed. Outside of this, there are many many interesting new solutions on mobile payments and mobile marketing (including barcodes) that I'll comment later this week or in a forthcoming report wrapping up the entire show.