2013 trends and How to analyse the industry in a mobile first world?

Introduction

In this article, I present some ideas which form the basis of my course at Oxford and also my tech policy analysis. It represents 2013 trends as I see them but also a framework to analyse these trends going forward

I will update this every month and also discuss in my Oxford course. If you wish to be a part of this community and discussion and receive updates, please contact me at ajit.jaokar at futuretext.com

For the past few years, we have been asking ‘Is this the year of mobile?’

We no longer do so.

Mobility is well and truly upon us and it is disrupting industries.

Over the years, I have been analysing disruptive trends in mobile both from a technical perspective and also from a transatlantic policy perspective.

This has analysis also has been a part of the course I teach at Oxford.

The question now is – How to analyse the industry in a mobile first world? 

 Why does this matter?

Mobility is more than ‘access via a mobile device’. The mobile device is inherently generative i.e. it leans to creation of content rather than pure consumption of content. Along with the Web, Mobility leads to converting closed systems to platforms. Platforms are more than APIs. Platforms are enablers for others to add innovation to your system.  There is a cost to ‘non participation’ as Kodak, Jessops and many others have found out.

The VC/angel investor Chris Dixon commented

What would the greatest technological leap you’d have to explain to someone who time travelled from the 1950’s? I possess a device in my pocket that is capable of accessing the entirety of information known to man. I use it to look at pictures of cats and get in arguments with strangers.

This statement is at the crux of mobility and the profound changes it brings and it is also the reason why many (especially in the enterprise) simply do not get ‘mobile’.

After all, mobile is one of the only technologies that makes its way from the consumer space to the enterprise.

Today, the single overriding theme for technology is seamless integration across platforms. Apps are the glue for that integration in many cases. It is a mistake to see ’open’ as free .. Open systems are bringing a fundamental change across platforms (TV Web Automotive Mobile) and the stack (Social – Cloud – Apps – Web – Devices – IOT – Networks) all powered by data.

How to analyse the industry in a ‘mobile first’ world?

How do we model the industry in a ‘mobile first’ world?

Here are some thoughts.

There are three elements that I am using

a)      An adapted version of Porter’s five forces analysis

b)      The converged stack

c)       The ability to orchestrate an emerging ecosystem

 

Let’s start with Porter’s five forces analysis.

 

 

 

 Porter’s five forces analysis is a framework for industry analysis and business strategy development formed by Michael E. Porter in 1979. The five forces determine the competitive intensity and therefore attractiveness of a market.  Attractiveness in this context refers to the overall industry profitability. An “unattractive” industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching “pure competition”, in a state of economic equilibrium – in which there is no incentive for companies to enter of leave the industry. (Wikipedia)

In 2008, Porter updated and extended this 1979 classic with some interesting examples which could be applied to the converged Web – Telecoms industry. For example, the dynamics and evolution of the airline industry have parallels to mobile. Independently of Porter, I have blogged about this before from a Telecoms perspective - What can telecoms learn from the evolution of the airline industry

Thus, Porter’s analysis can used to determine the overall underlying shift in competitiveness. But this is just the starting point. We have to combine two other elements –

a)      The converged stack and

b)      The ability to orchestrate an ecosystem.

The converged stack - To make sense of the converged industry and its evolution, we need to see merge the traditional IT and Telecom stacks and also incorporate social media and cloud. In a mobile first world, the device (typically a smartphone but also Internet of Things devices) are the touch point for the customer. Similarly, Data underpins the entire stack.

 

 

Geographically, you could divide the industry as:

  • North America
  • Japan and Korea
  • India
  • China
  • SE Asia
  • Africa
  • Europe
  • Brazil
  • LATAM excluding Brazil
  • Russia

Note this classification is based on market dynamics. For example: Japan and Korea have similar market characteristics. Similarly India, China and SE Asia all have distinct market dynamics. All are in Asia. In other words, Asia is not a homogeneous market

The ability to orchestrate an emerging ecosystem: Also, we need to gauge who can orchestrate an ecosystem. To be a market leader, you would have to unify and orchestrate the ecosystem around your product

Apple unified three elements of the ecosystem:

  • Customers(vastly superior product),
  • Operators(differentiation) and
  • third party developers(appstore)

Google also unified three separate elements of the ecosystem for Android

  • Customers(open device),
  • handset vendors(including new handset vendors like Dell) and
  • Operators(who did not have the iPhone)

So, within the above framework, here are the trends I am following. I believe that these trends will play out over the year and I will discuss these in the monthly updated analysis along with my course at Oxford.

Tablets, New form factors and connected devices

  • 2013 could  be the year of the Phablet which Samsung first introduced through the Galaxy Note
  • A dropping price point for tablets could lead to a tipping point for tablets.  This trend has widespread impact on printing, healthcare, the enterprise, newspapers and development of new services. Android could be the winner here.
  • New form factors and interfaces like Paper Tab and Youm from Samsung are changing the interface with devices
  • A whole group of devices are emerging which are connected but are not phones. Many of these are driven by kick-starter funding such as FitBit Flex, Pebble Smartwatch, HAPIfork (world’s first smart fork that helps you lose weight), Samsung T9000 refrigerator with an LCD and Evernote integration, CST-01 E Ink watch , Snooki and Android is heading for the kitchen.  
  • Home automation – Intelligent home make it to the list of disruptive technologies at CES
  • Virtual manufacturing – driven by 3-D modelling and 3-D printing which function as shared factories for hire will lead to a resurgence for small-scale (10-1,000) unit manufacturing.  For example – Shapeways, Ponoko, Sculpteo and i.materialise
  • For connected devices, the initiatives I am watching are Google’s Prediction API and  IFTTT. IFTTT offers an intuitive, user-friendly cloud-based rules engine expressed in simple logic “if this, then that”.

Social Media

 

  •  McKinsey report says that the untapped business value of social technologies in office productivity is $1.3 trillion
  • Like Cloud and Big Data, Social media has become a pervasive technology affecting many areas like entertainment, news, TV, Telecoms etc. Last year, Facebook went public. In 2014, we expect Twitter to go public. This means, social networks, which for most part are ‘free’ will compete for revenue (advertising dollars) and will also look for innovative revenue models. For example, Facebook charges 100$ to message Mark Zuckerberg. Business rivalries and ‘closed network’ behaviour will continue (ex Twitter – Instrgam battles). Facebook’s flirtation /love-hate relationship with browsers (ex : Opera and Rockmelt)
  • From 100 fascinating social media statistics in 2012 : 175 million tweets were sent from Twitter every day in 2012 – Instagram now has more than 100 Million Users, with more than 5 Million photos uploaded per day – WordPress.com currently hosts 42 Million blogs, with 25 Billion Pages viewed per month, and 400,000 daily comments – 55% of US Mobile Subscribers now own smartphones, up from 41% in 2011 – Digital Advertising spending is up 18% as compared to last year
  • Social networks reach a tipping point and the graying of social networking sites continues – A Pew Internet survey found that Sixty-one percent of adults under 30 reported that they used a social networking site at least once on a typical day while daily usage among Internet users aged between 50-64 rose to 32 percent.
  • According to  eMarketer  in China, TencentQZone, TencentWeibo, SinaWeibo, and Renren have significant market shares and Russia is dominated by Vkontakte and Odnoklassniki.
  • Both Israel Defense Force and Hamas used social media to gain mindshare for military conflict
  •  Tout is gaining in popularity.
  • LinkedIn has been 2012’s great social media success.
  • Social media are a complement to TV
  • Yahoo! And Google+ will have a ‘make or break’ year
  • Influence measurement tools will mature (PeerIndex, Klout, Kred) will mature as will contextual influence (ex Appinions, Traackr) tools
  • Finally, while not related strictly to social media – the tech industry itself is changing. While shows like CES are plagued by the Booth babes debate
  • Innovation and mindshare seems to be shifting to shows like South By Southwestwhich combine Music, technology and film

Mobility and apps

  •  Notice that for the past few years, every year, we asked – “Is this the year of mobile?” we no longer do so! Instead we ask if it’s Mobile first ..
  • The phone has also become the ‘remote control’ to our life – with the potential to unlock front doors and read blood pressure.
  • This trend will continue to the city i.e. the phone as a gateway to city services
  • Apps are the glue for convergence and apps are spanning platforms – TV, automotive, Web and Mobile
  • The app economy is mature with 1.2 billion consumers worldwide. The Apple iStore and Google Play dominate this ecosystem
  • Apps are taking advantage of new interfaces like facial recognition, cameras and retina displays (Towards a Retina Web)
  • Sound, voice, body sensors, location, and movement can become explicit or implicit input/output mechanisms for apps
  • According to  Forrester,  the App market was recently estimated to be worth $2.2 billion and set to expand by 85 percent.
  • In December, W3C announced that HTML5 is “feature complete”. This means, it is a stable and standard release which developers and businesses can plan around.  Already the implication is clear – Hybrid apps will dominate (By hybrid apps, we mean that developers can write HTML5-based code once and deploy to platforms like iOS, Android etc)
  • I also follow webinos and Mozilla Firefox mobile OS
  • Mobile advertising will be impacted by the rise of Phablets and a drop in feature phones
  • Mobility will impact design especially through responsive design
  • Mobile commerce and mobile payments will be the breakthrough category this year. According to Juniper -  “Over 1 billion mobile phone users will have made use of their mobile devices for banking purposes by the end of 2017, compared to just over 590 million this year”. However, it is not NFC but methods that  Square which will dominate. Operator billing will not be a dominant form of payment except in some cases where Operators can work together to provide a common system to customers. Mobile payments systems such as Google Wallet and ISIS will also contribute as will Bango with Bango’s one billion milestone
  • Operators continue to make money despite their complaints about spectrum availability. Global Telco revenues exceeded $2trillion in 2012 . This trend to make money will continue but locally we will see many factors that impact profitability such as whatsapp on KPN and the Operator Free mobile on France Telecom  Operators are also losing customer mindshare and losing revenue to new services.  With notable exceptions like Telefonica, this trend will also continue for other Operators.
  • Voice cannibalization will continue and will accelerate Facebook launches free-call feature in Canada first
  • Operators will continue to make ways towards the sensor driven economy calling it M2M(which is a subset of IOT). Verizon Wireless announced at CES that they were more than “just a phone company
  • LTE rollouts will continue. For customers LTE will mean video based applications outside the WiFi range. But since LTE also has a cost (which is not easily communicated to the customer), the impact of LTE will be low since it is unclear if customers are willing to pay an extra cost for video based mobility (unless that cost is predictable and comparable to other options such as WiFi)
  • Telcos are transitioning from a world dominated by mobile telephony to a world of mobile computing
  • Emphasis moves away from reliability and scale to an era of endless choice
  • The OTT i.e. Over the top players (as Telcos define them) are a threat not for revenue but for customer mindshare
  • Telco led technologies do not span the value chain. RCS, VoLTE, M2M, NFC are technologies promoted by Telcos but they don’t span the value chain
  • Whatsapp, Viber and others are fundamentally changing traditional revenue streams for Telcos

Internet regulation

Note – some of this this section adapted from the RWW article.

1)      International Telecommunications Union’s (ITU) conference in Dubai and its implications for the control of the Internet especially the ITU ETNO proposals (see 5 Reasons Why the U.S. Rejected the ITU Treaty). Bottom line, giving sovereign nations the ability to manage and monitor the Internet could result in a splintering of the Web. Upcoming 2013 conferences like the WTPF policy forum in May and the IGF forum in the Fall could be opportunities for dissenting governments to change their minds (and policies) about the future of the Web. But most observers see countries like China and Russia working to gain as much online control as possible to silence dissenters and control the spread of information.

2)      FISA: Intercepting Email – In November the Senate Judiciary Committee passed the Electronic Communications Privacy Act (ECPA), which makes any email more than 180 days old off-limits to law enforcement without a warrant. However, the  FISA Amendments Act grants the U.S. government extensive power to intercept emails and online conversations of people the Feds believe are foreigners — without a warrant.

3)      A revival of SOPA in some form

4)      An inquiry investigating the practices of collecting and selling marketing databases and sales contact lists. It’s looking at data collection methods, which Congress plans to use in considering new regulatory legislation.

5)      Regulation on anonymous commenting which has beneficial uses but could be used to suppress dissent

6)      And finally, but very significantly for the EU the - EU Data protection regulation which some believe that it will impact all free services like Facebook in the EU and the EU single market regulation especially in relation to Cloud computing Communication from the commission to the european parliament, the council, the european economic and social committee and the committee of the regions (pdf)

 

Enterprise and Tablet computing

A few mega trends dominate the enterprise

  • The rise of tablets which favour Google and Apple (as opposed to Microsoft). PC sales are already down as Windows 8 fails to exciteiPad is already eating into the consumer PC market
  • According to  Mary Meeker – Internet Trends Update Presentation – a tipping point has already been reached with iOS and Android now command 45% of the computing Operating system as opposed to 35% for Windows. It is still too early to gauge the impact of the Chrome book ($199) but the Chrome book will provide a choice to the customers.
  • The BYOD trend also will be fuelled by tablet adoption. A report by Business Insider shows global tablet sales exceeding 450 million units by 2016.
  • With the PC market came to a stand still, the impact on Intel will also be critical since Intel does not lead in the mobility space. The choice for Intel will be either to make a breakthrough up the value chain (and no clear path is yet confirmed) but also potentially to take the low end by focussing on foundry operations which could be profitable – but I suspect politically a hard sell.
  • New processors like Nvidia’s Tegra 4 8-core,  Samsung Exynos 5 OctaIntel Bay TrailQualcomm Snapdragon 800  will impact value chains – both for enterprise and the consumer

 

Automotive

  • Apart from Google’s Sergey Brin claiming that  that in 2017, “Google’s self-driving cars will be available for everyone” – Cars are getting smarter – mainly driven by integration of apps.
  • Ford, Toyota, Hyundai, Audi and BMW – all have smart car technology with integrated apps, voice control and entertainment driving this trend. Connected carswas a key trends at CE

TV

  •  TV boxes continue to get more beautiful with OLED TVs and  Ultra High Definition TV – but ironically – the future lies in breaking out of those pretty boxes and connecting to screens beyond TV.
  • Apps (especially tablet apps which enable co-viewing of TV shows) are a critical part of this evolution as is engaging with social media
  • Companies like Amazon, Netflix, Hulu and Apple which originate from outside the TV space will be expected to play a major role in the converged space driven by the TV and the Internet

User experience

  • Post Apple, design and user experience have taken a center stage Keep an Eye on These Web Design Trends in 2013.
  • Responsive design (see section on mobility) is a trend driving design
  • I also follow the  Twitter Bootstrap framework.
  • Google algorithm changes like  Penguin and Panda updates continue to drive web design towards dynamic and original content.
  • And ofcourse, Social media is a key part of the user experience ..

Conclusions

To summarise, we are addressing a complex problem – with a moving goal post i.e. How to analyse the industry in a ‘Mobile first’ world? We use a framework with three components -  An adapted Porter’s analysis, the Converged stack and detecting the ability to orchestrate the ecosystem

We take a quantitative and qualitative approach based on the above framework covering platforms, stack and policy.

 I will update this every month and also discuss in my Oxford course. If you wish to be a part  of this community and discussion and receive updates, please contact me at ajit.jaokar at futuretext.com