Research Notes

Mobile World Congress 2011 – a Preview by Strand Consult

The Mobile World Congress – 2011 will be yet another exciting year….
It is time to meet in Barcelona again. Once again almost 50,000 people will spend almost a week together exchanging thoughts, experiences and ideas. Strand Consult will of course also be there to follow the tradeshow that attracts people from all over the world in this industry – an industry that is becoming increasingly more vital to modern society.

And again the GSMA is offering an exciting programme with many very interesting speakers who are coming to Barcelona to share their knowledge, thoughts and especially their point of view on how the mobile industry will develop in the future. This year there is a great deal of focus on one of the areas people were talking about last year; what customers can do with their mobile phones. This year’s conference is very focused on advanced mobile phones and how customers could be using them – but also on how some customers already are using them.

The Mobile World Congress 2011 is very user-centric. There is not a great deal of focus on new network technology or how that technology is developing. It would appear that many are starting to take the networks’ technological development for granted – despite the fact that the mobile industry is facing some very large changes and infrastructure investments that will become the backbone of future mobile broadband networks. In our opinion it is a little sad that there is not more focus on how operators are increasingly choosing to build shared networks and how many countries are seriously discussing whether to use taxpayers’ money to ensure mobile broadband access in rural areas. Stand Consult published an interesting note about this last year:

There is a great deal of focus on the mobile services that customers are using. The question is whether there will be focus on who is creating value for whom, how the mobile value chain will function and how people expect to create a healthy ecosystem? I am wondering whether anyone will try to explain how Facebook, Twitter, Google and other Internet market players are creating value for mobile operators, customers, the media etc?

This year’s conference also seems to have more focus on the western world, than what is happening on the emerging markets. Despite the fact that there are significantly more mobile customers in the Third World, most of this year’s speakers are from Western Europe and the USA. In fact, it appears that it is the USA and especially Silicon Valley that has somehow managed to dominate the conference. It is a bit unfortunate to have so much focus on the USA – as the American market is only 7% of the global mobile market. On the other hand the American mobile market has also managed to dominate the media – almost 85 percent of what is written in the media about the mobile industry is for some reason about the American market. But in the real world, the American market has very little competition compared to the current market situation in parts of Europe, in Africa and in some parts of Asia. Domestic mobile competition in the USA is simply very limited compared to the extremely tough competition many mobile companies are facing elsewhere.

In a time where we are seeing an explosion in the number of mobile APIs and new billing methods, etc, we believe that it is important to examine how these are currently being used and how they ought to be used. At the end of the day, the goal is to give customers a good experience with the new mobile services that become available, while trying to eliminate the risk of customers being disappointed. Almost 30 percent of all customers that own a smartphone still only use it for voice and SMS. This is an issue and challenge that there should be more focus on.

It is tempting to ask why the Mobile World Congress does not have more focus on the many digital illiterates in this world? There are still many people in the western world that do not own a PC, do not have access to the Internet – and there are still many people who despite owning a PC and having Internet access, are having difficulty using this modern technology. Why is there not more focus on the role that the mobile industry could play regarding these people?

The Mobile World Congress 2011 is focusing on what we have been reading in the media and the impressive list of speakers will most probably guarantee that much of the media-hype that the participants have been smothered with during the past year will either come down to earth, or alternatively reach new heights!

The Keynote Speakers – they are almost all here.

Once again the list of keynote speakers boasts an impressive list of industry leaders. We have selected some of the speakers that we are most looking forward to hear and meet in Barcelona.

Microsoft’s CEO Steve Balmer will most probably give an entertaining presentation Monday afternoon. Having launched WM7, Microsoft is now facing the moment of truth; will they be successful in convincing the handset manufacturers to choose the MS platform? And if handset manufacturers choose the MS path, to what extent will they do it? The really big question is how much focus HTC will have on MS and how much on Android – and if HTC continues to have most of its focus on Android, how will MS compensate for the resulting losses?

Google’s former CEO Eric Schmidt will also be back for this year’s congress. His message last year was that Google is the operators’ best friend – but he did not really back his statement up with any documentation. This became very apparent when John Strand asked whether Google wanted to make operators into dumb pipes. You can see his presentation here approximately 42 minutes into the video you can hear John Strand’s question and Eric Schmidt’s not very convincing answer.

We have no doubt that Eric Schmidt will mention the impressive growth of Android and about Google’s mobile traffic and services. But it will be interesting to see whether he also addresses the increasing problem of Android not being one single platform, but rather many variations of a platform and why Google is more focused on mobile cloud services, instead of services that reside on the actual mobile handsets? We know for a fact that many handset manufacturers that use Android are frustrated over a number of issues – including the lack of partner support from Google.

This year we will experience Nokia’s new CEO Steven Elop. This will be his big exam in front of all the congress delegates and many journalists reporting from the congress. It will be interesting to see whether he can deliver the goods and make a positive impression on the audience? Will Stephen Elop be able to show that Nokia is alive and kicking and still very much a market player that should be taken seriously? From a historical point of view it should not be difficult for him to surpass his predecessor. This year’s Nokia presentation will be in Canadian English rather than Finnish English – a peculiar language that has annually lulled many in the audience to sleep! In just a few days we will know whether the world’s largest mobile phone manufacturer has some positive surprises up its sleeves.

We are also looking forward to Ryuji Yamada’s presentation from NTT DoCoMo. He is the CEO of an operator doing business in a country with a population of 122 million people that are among the most advanced mobile users in the world – despite the fact that there are less than 2.5 million Japanese that own a smartphone. For many years, DoCoMo has documented that services, service platforms and business models are extremely important elements for marketing, selling and making money on non-voice traffic. DoCoMo has proved that technologies like e-mail, Flash Lite, Doja and XHTML can easily be used to create a large mobile services universe that is used by millions of people every day.

One of Twitter’s founders Evan Williams is also coming to speak. While I am sure he is looking forward to speak to the mobile industry, I am quite certain that he is just as excited about visiting Barcelona. Twitter is still a very small mobile traffic dwarf regarding the amount of SMS traffic daily being generating by Twitter on the operators’ networks. We have no doubt that even Williams can learn a lot in Barcelona – amongst other things about how the world’s mobile customers send more SMSs in one day than there are twits on Twitter during a whole year.

Vodafone is sending Vittorio Colao. We hope he will be talking about Vodafone’s future strategy and how they plan to create value for their shareholders. Will Vodafone create the most value for their shareholders by letting a man do a “Gordon Gekko” (from the movie Wall Street) and clean up the business, or is Vodafone capable of reinventing themselves? Strand Consult is currently betting that the first option is most likely, but we also believe that the empire builders within Vodafone will also have more focus on their future empire than on their shareholders.

On day 2 at 11:45, one of Steve Balmer’s and Eric Schmidt’s best friends in the mobile world will be speaking. We are very much looking forward to hearing the presentation from HTC’s Peter Chou. Why don’t we just call him Mr Smartphone? What Peter Chou has done with HTC is simply impressive. HTC has accomplished what many other mobile manufacturers can only dream of; created a whole range of smartphones that customers simply love and that are achieving impressive sales figures. Without the help of HTC, Android and WM7 would be reduced to hired extras in the mobile universe – instead of being the stars of the show. We can only watch with admiration as HTC continues to launch some of the most attractive smartphones on the market today and it would not be surprising if both Steve Balmer and Eric Schmidt include Peter Chou in their evening prayers (when they get to the part about thanking for their mobile success).

Yes, once again the Mobile World Congress has an impressive list of keynote speakers – and if the moderators and audience have prepared some critical questions, we have no doubt that the 2011 MWC will be an exhilarating experience, that will include a great deal of exciting information and lots of entertainment.

The many other presentations during the week

When looking down the list of the many other presentations during week seven, there is no doubt that there is a great deal of focus on many of the subjects we have been reading about in the media. We hope that these speakers will be more specific than many keynote speakers most often are, and thereby raise the debate to a higher level than we have so far been reading in many media. Now is a very good time to urge participants to ask critical questions – most of us are coming to Barcelona to learn – and not just be entertained.

We are looking forward to the sessions about mobile apps. We hope these sessions will focus on how to make money from these types of services. It will be exciting to hear about all the people that have yet to make money on apps and what role operators will have in the future. Will it be the operators that deliver premium billing, or APIs that make apps more intelligent, or will operators over time be reduced to dumb pipes?

There is also a great deal of focus on the Mobile Cloud. Fancy new terminology! But what is actually happening in this area, which services are customers using and which services will customers use in the future? We hope this year’s congress will remove some of the hype surrounding cloud-based services, so we can have a real dialogue about this market and how it is developing. Strand Consult would very much like to see some focus on which role operators will have within this area, and we are very interested to learn whether operators have any chance at all of avoiding becoming simple dumb pipes.

Another area that the conference is focusing on is of course social media. Social media is here to stay and anyone can today use Twitter or Facebook to become the editor in chief of their own media. People can now easily and quickly publish unedited content that focuses on their current interests and actions that they want to share with the world. Yes yes yes – social media is big and important. But how will social media influence mobile operators? Will it – as we already have seen in Denmark and Norway – cannibalise SMS traffic, thereby making it decrease? How should operators and handset manufacturers tackle this new reality?

We will also have the opportunity of learning more about mobile advertising. Again this year we have no doubt that there will be a great deal of hype surrounding this area. But we do hope that we will get the opportunity to learn more about the current position of mobile advertising compared to other forms of advertising and the status surrounding the business models in this area. It would be nice to learn what role a traditional media company can play within this universe and we hope that some of the speakers can tell the difference between fact and fiction in this area.

Another exciting area is mobile TV. In our latest report about this subject, we closely examined the current market and status of this business area around the world, which has resulted in some very strong opinions at Strand Consult regarding the various types of mobile TV. We would love to see more business cases presented, learn more about the end-user’s ability and willingness to purchase and pay for TV on their mobile phones and it would be nice to know whether mobile TV will be free in the future? Is DVB-H dead and will mobile TV in the future have a closer resemblance to YouTube than traditional linear TV?

Another focus area is the MVNOs. Strand Consult has been working closely in the MVNO area for many years; At the conference people will be talking about the next generation MVNO – what will happen next after the events already seen in countries like Denmark, Norway, Holland, Germany etc. But they are forgetting that many large countries have yet to see the first generation of MVNOs emerge – for example countries like the BRIC countries and Africa. Why is there no focus on how the MVNO market is developing on emerging markets – it is a pity that the conference will not be focused on what is currently happening in this area in a number of countries.

Again this year we will be looking at Mobile Money. It will be exciting to learn what has happened since last year – if anything actually has – and what role operators will be given when mobile payments become a reality. It is difficult to see where mobile operators can add value in the value chain that banks, credit cards, clearing houses and retailers have optimised over many years. It would be very nice to start getting some answers to questions like exactly how fragmented will the mobile money market become, which types of payments which companies will handle and what will it cost the various market players and especially the end-users’ to use future mobile payment solutions?

We almost can’t wait ….

There is no doubt that the Mobile World Congress 2011 will be very exciting – especially for those participants from the Western world that believe that it is the USA that is driving the world’s mobile development. It is unfortunate that this year’s congress has a little too much focus on the 300 million Americans and 300 million European mobile customers and is somewhat forgetting the 4.3 billion other mobile customers around the world that use their mobile phones every day.

Despite this slightly one-sided focus, we are certain that everyone who travels to Barcelona to participate in the Mobile World Congress will undoubtedly get good value for their money. Week seven of 2011 will be an exciting week where the world will see many new products unveiled and where some of the world’s largest mobile market players will compete over who can attract the most attention from the press. Strand Consult is looking very much forward to participating and once again meeting many of our customers and partners that like us are travelling to Barcelona to be inspired, meet exciting people and hopefully be entertained during a number of exciting presentations.

What happened at the previous congresses?
Every year Strand Consult always publishes a pre-congress newsletter in the weeks up to the Mobile World Congress about what we believe and hope we will be seeing at the congress. And every year when we return home, we publish a post-congress newsletter with a summary of the most important events and announcements of the congress in our opinion.

You are very welcome to browse through our previous MWC newsletters by clicking the links below.


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