Once again, I spent a couple of days in Barcelona at Mobile World Congress (MWC).
With 60,000 visitors (10,000 more than last year) — including an amazing 12,000 developers (!), 3,000 CEOs, and 2,900 journalists — MWC is the place to be for anyone wanting to make the most of mobile technologies.
Year after year, it is interesting to see how the show is becoming more global, more open to non-telecom players (advertisers, developers, etc.), and more open to connected devices other than just phones.
While it is difficult to summarize all the news and announcements, here are my key takeaways from MWC 2011:
Android, Android, Android.Google’s Android stand was the hit of MWC this year. Why? Very clever marketing: It was located in the main hall away from all the other players in the App Planet hall; it had a “cool” bar with animations; the Android robot logo was all over the place; and it featured interesting demonstrations from startups and key players. Google’s Android was helped by Apple’s absence and the lack of a serious upgrade to Windows Phone 7, unlike last year. Of course, the Nokia-Microsoft deal came up in most conversations. Forrester has already published its take on the strategic implications of this key announcement (clients can read it here). As my colleague Charles Golvin sums it up: “Nokia hopes to produce its first Windows Phone in 2011, but it will not bring a significant portfolio to the market in volume until 2012 — a lifetime in today’s smartphone market.” With 300,000 Android phone activations per day and 170 Android-based handsets currently available from 27 vendors, Android is definitely getting a lot of traction.
Nokia just published its fourth-quarter and annual results for 2010. I am not going to focus on the overall announcements and what they mean for Nokia’s device business in particular, but Nokia’s update on the Ovi Store is quite interesting.
Here are some of the key takeaways from a data perspective:
4 million-plus daily downloads on the Ovi Store.This is an increase of 200% from the 2 million daily downloads statistic shared at Nokia World in mid-September. If momentum continued and we assumed an average of 5 million-plus daily downloads throughout 2011, this would represent close to 2 billion downloads for 2011 alone. That’s not bad considering that Apple just announced 10 billion cumulative downloads since the launch of the Apple App Store in July 2008.
Good performance in BRIC and emerging countries.Seven of the top 10 most active countries are in the BRIC region or are emerging countries. These include: China, where Nokia claims to be the No. 1 store with 65% share (based on independent research); India; Indonesia; Russia, which sees more than 1 million downloads per week; Saudi Arabia, Turkey, with 1.6 million downloads per week; and Vietnam. One should not forget that growth and volumes will increasingly come from these regions. As a result, developers may increasingly be open to Nokia’s pitch that it offers local reach and global scale. One of the main advantages of the Ovi Store is its ability to provide operator billing (currently available in 32 markets), which makes a lot of sense in unbanked or underbanked countries where credit card penetration is low. Interestingly, 27% of the current downloads come from low-end devices (e.g, Nokia’s S40 proprietary platform) — meaning that apps are not just for “smartphones.”
In a recent post, my colleague Julie Ask and I examined what happened in the mobile space in 2010. In a new report, we are highlighting what we expect the key trends to be in 2011. While we believe that most of the trends identified last year will continue throughout the year ahead, here’s a snapshot of more specific trends that will shape the market in 2011.
• The mobile/social/local combo will explode in usage but generate little revenue.
• 2011 will be the year of the “dumb” smartphone user. Thanks to handset subsidies, smartphones will be available to the masses. Expect new smartphone users to be less engaged and active than the first cohorts of Android and iPhone early adopters. The good news is that thanks to customer education and the convenience that these devices offer, even “dumb” smartphone users will consume more mobile media than ever before and will have incremental usage of mobile data!
• The mobile fragmentation problem will continue in 2011. Prioritizing mobile developments will still be a challenge, and cross-platform development has not yet been achieved successfully.
A year ago, I tried to highlight what the key trends for 2010 would be. I wrote: “I’m not going to say that 2010 will be ‘the year of mobile’ or ‘the year of mobile marketing.’ I think 2010 is more likely to be the ‘year that every firm needs a mobile strategy.’ Mobile is simply too disruptive to merely have a year. After all, who remembers the year of the TV or the year of the Internet? Instead, I think 2010 will be a key year in mobile's transition to center stage in the digital marketplace. A new mobile decade is opening up, and now is the time to start your journey. In the past 10 years, mobile phones have changed the way we communicate and live. In the next 10 years, they will change the way we do business.”
Interestingly, that report — “2010 Mobile Trends” — was one of the most-read at Forrester, highlighting that a growing number of companies are starting to take mobile seriously.
So many things happened in 2010 that it is difficult to sum up the year. However, my colleague Julie Ask and I took a step back to offer our high-level take:
• New entrants are disrupting existing mobile ecosystems. Non-telco companies, such as Apple, Facebook, and Google, increased in importance as key players in the mobile ecosystem. Together, Apple and Google are closing in on controlling about half of the smartphone market and mobile advertising share in the US and have obtained a lot of traction in Europe and other regions of the world.
First of all, the technology is not new at all. It is simply moving from PC and industrial environments to a marketing and mobile context.
Let’s face the reality: for now it is primarily used by brands willing to launch innovative mobile services and in search of a “wow” effect.
Few consumers are currently holding up their smartphone to interact with their environment as a totally natural gesture. Whether you look at the installed base of Junaio or Layar’s mobile users, this is a niche market.
From a pure technology standpoint, AR requires object recognition and computerization on the mobile device itself, as well as 3D rendering to superimpose images on the real world. This is a technology that only a few companies such as Metaio and Total Immersion really master.
The information displayed must be ultra-accurate and delivered in a perfectly seamless way. This is still far from being the norm for many of the so-called mobile AR applications.
To put it succinctly, mobile AR is not yet delivering its promise. There are certainly more significant short-term opportunities to tap into with Web-based and kiosk-based AR solutions, in particular related to eCommerce.
However, Forrester believes consumer product strategists should not dismiss the technology. On the contrary, it is likely to trigger disruption in the years to come and to open up new opportunities.
Is this a key technology moving forward? Yes.
Think of mobile AR as: “A way to click on the real world with your phone the way computer users navigate their desktop with a mouse. Just point in the direction you want to search, or at a place you want more info about,” which is how GeoVector summed it up in promoting its World Surfer application.
To help consumer product strategists and executives answer this question and benchmark their mobile consumer strategy, Forrester fielded a Global Mobile Maturity Online Survey in Q3 2010. We interviewed more than 200 executives in charge of their company’s mobile strategy across the globe (40% in the US, 40% in Europe, and 20% in the rest of the world).
First, only a third of respondents said that they had had a mobile strategy in place for more than a year. Companies in this situation are from many different industries, but online players, media companies, and financial institutions are often more advanced. Forty-five percent of respondents are just waking up to the mobile opportunity and thinking about integrating mobile into their overall corporate strategy — just like they did a decade ago with the emerging online channel.
For the majority of respondents, mobile is mainly seen as a way to increase customer engagement, satisfaction, and loyalty. Mobile is less useful as a way to acquire customers and generate direct revenues — just 2% expect to generate more than $10 million in mobile revenues for 2010. While companies are assigning clear objectives to the emerging mobile platform, 23% of respondents still consider their primary objective with mobile to be to “test and learn.”
Because of poor execution in 2009, the industry consensus — particularly in the US, where Nokia has a small footprint — was that Nokia was not in a position to catch up with the Apple App Store or Android Market. Reports of the Ovi Store’s death were greatly exaggerated: Nokia simply cannot afford to fail. On the contrary, it is now catching up, particularly in emerging countries, where Nokia clearly differentiates thanks to its unique local presence and relationships with operators (mobile billing is currently supported in around 30 countries).
Nokia just issued a press release this morning insisting that Ovi Store downloads are now reaching 2.3 million per day for a total installed base of 140 million active users. Bear in mind that a user is considered active on a six-month period and that this figure includes multiple Ovi experiences, including the 17 million Ovi mail and chat users as well as users of Ovi Maps, Ovi music, and Ovi life tools.
That's an increase versus last May (1.7 million) and versus the data that was announced at Nokia World two weeks ago (2 million). More interestingly, 200,000 people are signing up daily to Ovi. That's a significant trend.
I am attending Nokia World in London. For those of you not familiar with this event, that’s usually the conference where Nokia shares its vision and strategy, announces new products and services, and demonstrates its latest innovation. This is also an interesting opportunity to hear thought leaders share their vision of the mobile industry (this year, Sir Tim Berners-Lee). See the agenda here.
The 2010 edition is already unique in Nokia’s history due to the recent appointment of Stephen Elop as the new CEO and yesterday’s resignation of Anssi Vanjoki, currently EVP of Nokia's Mobile Solutions unit. Needless to say there is lots of speculation about Nokia’s future. Let me wrap up some thoughts:
It’s precisely all about organizational and cultural issues. No one should be surprised to see other departures as well as the arrival of new executives close to the newly appointed CEO. Nokia’s real challenge is to make sure these changes are implemented quickly enough -- without totally disrupting existing processes -- to keep pace with innovation. The simple fact that Nokia appointed a non-Finnish CEO, coming from the US and from Microsoft and the software industry, is another acknowledgment that Silicon Valley has become the new mobile innovation hub. Nokia’s cultural heritage is precisely to constantly reinvent itself. Tectonic shifts are shaking up the traditional mobile ecosystem, and Nokia needs to be much more agile to compete with the likes of Google and Apple.
Apple reinvented the distribution of products and services on mobile phones, opening up direct-to-consumer opportunities for nontelecom companies. The numbers look impressive — more than 5 billion downloads and $1 billion paid to developers in the two years since the launch of the Apple App Store.
However, it also generated $429 million for Apple itself in two years. These revenues are not meaningful to Apple’s core revenues. Due to the limited number of paid apps and their significant concentration among games and navigation apps, it is likely that a significant number of independent developers have not recouped their investments via the current revenue-sharing model. The recent launch of iAd is a way for Apple to maintain the attractiveness of its platform, allowing third parties that provide free apps to develop sustainable business models.
But, despite all the hype around apps, only a minority of consumers download them monthly. A recent Forrester survey of more than 25,000 European adults shows that only 4% of all mobile users and 15% of smartphone users report downloading apps at least once per month. However, the fact that 21% of all European mobile users consider apps to be an important feature when choosing a new mobile handset highlights the large gap between today’s limited usage of apps and consumer awareness and interest.
The application store market is still nascent, but it is evolving quickly. However, in the longer run, few players will be able to address the key factors that will make them a success:
I booked my first hotel night via a mobile device a year ago.
I didn’t even think about the fact that it would be considered an “mCommerce” transaction, as I simply booked it directly on the hotel group’s Web site via the browser of my mobile phone. The site wasn’t actually optimized for mobile devices, but it was possible to enter my credit card details via a secure Web transaction. That’s not ideal, so I wonder how many mobile transactions that firm has missed simply because it doesn’t provide a compelling user experience.
European mobile commerce is still at an early stage. Digital content is still the primary product purchased via mobile devices, but European consumers show growing interest in using their mobile phones for all sorts of shopping activities. I have recently contributed to a new report on the state of mobile commerce in Europe, written by my colleagues serving eBusiness Channel and Strategy Professionals. The report reveals that: