Research Notes

Mobile World Congress 2009 – a Review by Strand Consult

This year’s Mobile World Congress in Barcelona is over, and once again many of the Telecom industry’s top management convened in Spain to exchange experience, knowledge and show their latest technological triumphs – altogether almost 47.000 people met in Barcelona. There is no doubt that the financial crisis has caught up with a number of the Telecom infrastructure providers, but on the other hand it does look like the actual Telecom industry is not going to be hit quite as hard as many other industries – people are still using their telephones and most operators have a healthy cash flow and sensible earnings.
Attending the Mobile World Congress is always fascinating, and again this year there were many opportunities to have serious debates with the industry leaders during the many conferences that were spread across the four days of MWC – and again Strand Consult also made our mark. Participating in the conferences enables us to find out whether our predictions were correct and at the same time gives us an opportunity to read the signals that many of the industry’s most important players are sending out.
One thing we could criticise is that this year’s conference was very Americanised, there were many companies from the USA and a great deal of focus on how Americans perceive the mobile world and how it is developing. Let’s stick to the facts for a second; the USA only has a limited share of the global mobile market, none of the American operators are global market players and the American infrastructure providers are finding it difficult to do business in this industry. In many ways one could say that the USA is just as successful in the car industry as they are in the mobile industry – perhaps not quite fair when you think of companies like Qualcomm and Cisco, but in general the Americans are good at IT, but not quite as good at Telecom.
One of the exciting presentations at the conference was the one where Steve Balmer, CEO of Microsoft, Nokia Chief Olli-Pekka Kallasvuo and Ralph de la Vega, President of AT&T presented their visions for the future. However this year will be added to the list of years where Microsoft disappointed us. Steve Balmer is always fun to listen to, but on the other hand it is sad that Microsoft’s mobile vision is limited to ensuring that everything they have created on the desktop must be able to function on a mobile telephone. Where is the mobile vision where things are moving from the mobile over to the desktop – instead of in the opposite direction?
Olli-Pekka Kallasvuo’s Nokia presentation was okay and this year we found out why Mr Olli-Pekka Kallasvuo is not Mr Entertainment himself; he is a lawyer by education – and they are usually not the funniest people in the world. But at the end of the day one should not judge Nokia on their presentation techniques, but on the products and services they offer, and in that area Nokia continue to announce a wide selection of products. If you examine how Nokia is performing compared to their competition, there is no doubt that they are in a unique position that is constantly being improved. Personally I liked Ralph de la Vega’s AT&T presentation, that showed an American operator that is starting to move in the direction that we believe the world is developing towards. This year’s message was very clear – that AT&T has understood that the market is very fragmented and that different customer segments are demanding different types of products and services and that it is an operator like AT&T’s job to ensure that these products and services are available to their partners. The most interesting message was the announcement that AT&T is allowing access to their APIs, allowing third-party companies to create additional services on top of the AT&T network.
After the three presentations, Walt Mossberg from the Wall Street Journal took the stage as moderator for what could have been an exciting discussion about the current mobile market and how it is developing. While there is no doubt that Walt Mossberg is a highly respected columnist at the WSJ, is he appears to have the same level of knowledge about the globe mobile industry, as George Bush had about what was happening outside the USA. How can you spend the whole debate discussing the iPhone and the significance the iPhone has hand on the mobile market in Walt Mossberg’s opinion, when less than 1% of the 4 billion mobile phones in the world are iPhones? In fact even Opera Mini has been more successful measured in number of users, than the iPhone.
I understand that the USA is currently experiencing difficult times, but to be so nationalistic and have so little focus on what is happening outside the USA as Walt Mossberg had in that panel debate is sad, when it is happening at the Mobile World Congress. That discussion would have been perfect for the CTIA, but was close to a scandal when people come from every corner of the world to hear how some of the industry’s most important people view the future in a global industry. When the world’s top leaders meet in Davos once a year they talk about global development – not about US national politics. A Danish cartoonist has illustrated Walt Mossberg’s opinion in the panel debate like this:
This year there was a great deal of focus on Mobile Value Added Services and there were many good examples at both the conference and exhibition, showing that the number of useful applications is exploding and an increasing number of people are using their mobile phone for other applications than just voice and SMS. What frightened us a little this year was the focus on Application Stores as a solution to the problem of some people only using their mobile phone for calls and SMS. Put somewhat bluntly, you cannot solve the problem of illiteracy by building bookstores. You need to educate customers and ensure that there are attractive products that they want to purchase and use. If you have no conception of the value of a book, there would be no point in learning to read – all parents know this as they go through the process of teaching their children to read.
Again this year many were talking about Android, but where are the phones and how attractive will they be when they reach the market? If you examine what has happened since Google launched their Android vision, the developments have followed our original predictions: , and there is no doubt that it will probably take some time before we will see some interesting handsets on the market. So far Google has not produced any products that are especially commercial or even close to being attractive to the mass market. Google is very good at searches, but has still to deliver in the mobile area.
It was very obvious this year that the mobile broadband market is enormous and growing at a tremendous rate and that LTE will be ready when the market starts demanding that capacity size. This market is developing along the lines we described in our report: . There is no doubt that mobile broadband has become a huge success and millions of customers each month are purchasing one of these connections. We would have liked to see a little more focus on the underlying business models and the challenges mobile operators are facing due to the influence of mobile broadband on the DSL market – we know that mobile broadband will cannibalise a large chunk of the DSL market players’ customer bases.
The regulative challenges are enormous and despite the attendance of 60 governmental delegations at the Mobile World Cup Congress this year, it is important that the political system starts distinguishing between the IT industry and the Telecom industry, as described in this research note: It is important that politicians around the world perceive the Telecom industry as an important tool to fight poverty, a tool that can help society become more efficient and as an industry that can greatly benefit the environment. If I was a politician I would examine how I could improve my society by using modern telecommunication.
Basically it appears that many politicians view the Telecom industry as an industry that requires tough regulation, to help increase politicians popularity among their voters. In the EU it almost seems like Vivianne Redding is trying to purchase popularity among the European populations: . On the other hand there is little doubt that the actions of many politicians are proof that the Telecom industry has not been especially good at selling themselves – which became especially clear in Barcelona this year.
Many countries are talking about Green ICT or green IT – why are we not talking about Green Telecom and what the Telecom industry can do for the environment? There is no doubt that projects like the universal charger, and the fact that the Telecom industry can make the world smaller, are subjects that should be on the agenda when talking about how we can protect the environment. In reality the Telecom industry is probably the industry that can most benefit the environment today and if the world’s leaders at the Global Climate Summit in Copenhagen in December –  – chose to include the Telecom industry’s role in their agenda, the world might understand what the Telecom industry can do for the environment. In case you did not know, the Telecom industry is NOT on the agenda of the Climate Summit in Copenhagen in December 2009.
Before the Mobile World Congress, we predicted that this year’s conference would be the moment of truth for many players in the industry – and it was. We saw those that deliver the goods and create value for their customers and thereby also value for their shareholders – and we saw those that believe that the MWC is about releasing as many press releases as possible with a high bullshit factor. We are certain that many of the latter companies will not be attending next year – unless they start learning from the industry leaders and start adjusting their businesses to the reality that we all are a part of.
All in all it is thumbs up to the GSMA for this year’s conference. Overall it was a good conference with a great deal of focus on issues that will benefit consumers and society. Next year it would be good to have a little less focus on the USA and a little more focus on what is happening in the real world where all us others work – where the cash flow is being generated and where 92% of the world’s mobile customers live.
We look forward to next year’s conference and would not be guessing, if we state that we will be seeing further consolidation in the market during the coming year. We will just have to hope that the political system will have a greater understanding of the industry that is basically creating the foundation of modern society.

MWC 2009 – a preview by Strand Consult

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