Who's leading mobile innovation?

Conventional wisdom in the mobile industry is that Japan and South Korea are the most advanced mobile markets worldwide while US is lagging behind and Europe somewhere in the middle. This is less and less true.

Bear with me one second. I am not saying Japan is not anymore way ahead of the mobile curve.  Just need to look at Japanese facts to be convinced: 3G penetration is over 90%, mobile Internet usage is ubiquitous as well as QR-codes and many many other innovative services have reached critical mass (mobile contactless). Many skeptics argued for a long time this was due to the uniqueness of the Japanese culture and that these trends would not come to Europe or to the US.  Why is Japan only a few years ahead? It is an extremely complex question and I think there are many different factors to take into account beyond the cultural explanation. Indeed, it might well be that Japanese are spending much more time in public transport (vs the US “car” culture) and that they may have a specific relationship with their “keitai”. However, there are also plenty of other factors to take into account, among which geographical constraints such as distribution of the population, role of operators and their relationships with handset manufacturers (Nec, Sharp, Panasonic...),  homogeneous market conditions (on the contrary and despite the adoption of the GSM standard, Europe is still very fragmented with as many different regulations and languages than there are countries). Consequently, return on investment is easier for players who do not have to deal with many different players and environments. However, Japanese mobile stakeholders have been more successful in diversifying their businesses than in internationalizing them. Japan or South Korea are still years ahead as far as usage of mobile services are concerned but it seems to me different market conditions are gathered elsewhere and that drivers are now in place for take-off. Recent Asia Pacific Technographics data I have seen clearly show that mobile usage in urban China and India can even be higher than in Tokyo or Seoul! Mobile marketing and advertising is growing quickly in Turkey while emerging countries are taking the lead in mobile payments.

Mobile innovation is increasingly coming from the US and in particular from the likes of Google, Apple, RIM, Facebook, Microsoft, Amazon and eBay. Why? I think there are several factors for that. Among the main reasons I can see is 1) the homogeneity of a market made of more than 250,000,000 cell phone users (despite the GSM / CDMA clash) and 2) the fact that the digital market is simply more mature making mobile the new growth platform for the Internet big-hitters and some of the Hollywood media companies. Mobile e-mail or Instant Messaging usage is higher in the US than in Europe. SMS is less widespread with around 80% of Europeans sending SMS but volumes per user are way lower due to the lack of all you can eat messaging package.

Does that mean Europe is now lagging behind? Absolutely not even though this is a risk that should not be underestimated moving forward. The GSM standard was probably the greatest European contribution to the mobile industry and many players from Nokia to Ericsson via operators (Vodafone, Orange, Telefonica, TeliaSonera, Telenor) have proven they have a global footprint and have introduced many innovative services. More importantly, Europe does not mean much per se. Usage varies significantly from one country to the other, as highlighted on the graphic below: