All posts by Mehmet Unsoy

About Mehmet Unsoy

Dr. Mehmet Unsoy is a Partner at Cartagena Capital, responsible for the North American market. He is a telecom technology leader, with 30 years of data, IP and wireless communication experience. Mehmet has extensive global market experience working with wireless and wireline operators in North America, Europe and Asia/Pacific, while being based in Ottawa, Tokyo, London and Dallas, during his career. He was most recently CTO / VP Technology & Chief Architect for BT, BT Wireless and mmO2, a major mobile operator with operations in the U.K., Germany, Holland and Ireland, with total 19 Million subscribers. Prior to joining BT, he was with Nortel Networks, for 17 years, with senior management responsibilities in technology, product development, marketing and business development roles, in Nortel's enterprise, wireline and wireless divisions. He is currently or was serving as Advisor and Consultant to several large VC firms in the U.S., such as Vesbridge/St.Paul Venture Capital, Flagship Ventures, Highland Capital Partners, Atlas Venture, Kodiak Venture Partners and Bessemer Venture Partners. He is currently or has been also on the Advisory Boards of several wireless related technology companies, in the U.S., Canada and Europe, including Bridgeport Networks, mBlox, Roundbox, Mobile Wisdom, Kajeet, Teltier Technologies, Chantry Networks, Context Connect, Incucomm, Visage Mobile, Proquent Systems, Taral Networks (now Airwide Solutions) and Megisto Systems. Mehmet has a BSEE degree from METU in Ankara, Turkey, and MS and Ph.D. degrees in Computer Science from the University of Waterloo, Canada.

Key Trends at CTIA Wireless 2009

CTIA 2009 - Mobile LifeI attended the CTIA Wireless 2009 show in Las Vegas, April 1st – 3rd, 2009. The attendance was reported to be down 10%-15% compared to last year, which was 40K. I could feel the cut back in attendance, especially on the 1st and the 3rd days of the show. There were less exhibiting booths, much smaller booths, and felt like, only LG had a good size booth! Since CTIA is so close to MWC in Barcelona, held just 6 weeks ago, CTIA is turning into a North American regional show. iPhone is a major leader in wireless industry, but Apple was not at CTIA. Nor was Google, despite their huge Android and G1 initiatives. Cisco was also absent. So, there were some major no shows.

The key take aways from CTIA 2009 were:

LTE is the next major investment industry will be making. With Verizon’s recent announcements, U.S. market seems to be now leading on the LTE front.
It is the Apps and in particular, App Stores that garner the most interest, especially with RIM launching, and others such as Microsoft and Nokia are expected soon; but all far behind the iPhone / iTunes leadership Mobile adverting & mobile marketing, despite (and maybe because of) a large number of smaller players, the progress being made is painfully slow. This portion of the industry is still in its infancy; not clear what direction it is going to take. There were several interesting developments in WiMAX, Femtocells, Healthcare, Smartphones, messaging / twittering, music and video services, and Al Gore’s closing keynote! First, some interesting numbers that reflect the state of the wireless industry:

Globally, we had 3.6B mobile subscribers in 2008, increasing to 4B this year, and targeting 4.9B by end of 2009. Wireless operator revenues were $700B last year, and will grow to $855B by 2012. Handset sales will decline briefly, from 1.22B to 1.2B this year, but expected to reach 1.4B by 2012. Industry capital spending will also decline briefly from $51.2B in 2008 to $50.7B in 2009, and stay around $50B for the next 4 years, and finally U.S. market reached 270 Million mobile users, with the 14 Million adds in 2008.

It looks like the global economic problems are not significantly affecting the wireless industry; in fact wireless may become an engine or core element of the global recovery.

Verizon’s LTE supplier decisions generated significant presentations, discussions and demonstrations. The winners such as AlcaLu and Ericsson were displaying a lot on LTE, including Evolved Packet Core (EPC). It looks like AlcaLu will play a more evolutionary role with Verizon, since they can provide the “transition from CDMA to LTE”, while Ericsson’s approach might be more Greenfield.

On the App Store front, Research in Motion (RIM) was the talk of the town! Their Blackberry App World was the subject of the Keynote on April 1st, starting with 1000 apps in the store, covering both enterprise and consumer apps. During the exhibits, Blackberry booth was one of the liveliest, with lots of interest. However, 1K apps is no comparison to 25K apps that iTunes has. Also, it was revealed that RIM will be keeping about 20% of the App revenues, the rest will be shared between the operators and the developers. In iTunes case, Apple gets 30%, and the rest goes to the developers. Nokia’s Ovi and Microsoft’s App Store are also on the way. However, there is also a major cost factor for app developers.

According to MTV, it cost $5K to $20K to develop an iPhone app that runs on 17M iPhones and iPods around the world, whereas $100’s K is needed for Java or BREW apps. That is a huge difference!

Skype app was made available on iPhone and on Blackberry in the beginning of CTIA. It had more than 1 Million downloads in 2 days, just for iPhone. There were lots of people trying out Skype calls with these two devices on Wi-Fi environment (it is not supported on the cellular networks!), with mostly positive feedback. However, there may be some operator / regulator push backs, both in the U.S. and in Europe, in the coming days!

Mobile advertising / mobile marketing is taking the center stage for the new business models being pursued for mobile services, apps and content delivery. There are a large number of young companies involved in different parts of the mobile advertising eco-system. There is a clear shift of ad budgets from traditional marketing media to more focused & more personal mobile user environment. However, value chain is still complicated and requires a significant amount of coordination & cooperation. The four major U.S. operators have recently reached an agreement, through Mobile Marketing Association, on standards for mobile marketing practices, which should improve significantly the operational efficiency and time-to-market for mobile marketing campaigns. However, this segment of the wireless industry is still in its infancy, and we should expect some consolidations / re-structuring in the eco-system.

Video seems to be major mobile app, with mobile video downloads increasing significantly. MTV was quoted with 25M downloads in 2006, 50M in 2007 and 100M in 2008, i.e. 100% y/y growth! Also, Nielson was quoted as 11M American watched video on their mobile handsets in 2008, spending average 3 hr 42 min per month. On the Mobile TV front, Digital TV (DTV), based on ATSC, will start to be deployed later this year. I saw some excellent quality LG handsets that receive DTV video broadcasts. Qualcomm’s MediaFLO is not shying away from the competition; in fact, MediaFLO is expanding to new cities, now offering service in 68 markets across the U.S.

Some people in the industry think that WiMAX is dead, due to the economic downturn we are facing. I don’t believe so, because of three reasons. First, Clearwire had a strong presence at this show, reiterating their commitments to national deployment, emphasizing that the key issue is capacity for the U.S. market, and they’ve got huge 120 MHz of spectrum across major markets. Second, recently issued U.S. government’s economic stimulus package dedicates $7.2B for new broadband deployment across the rural U.S., which will be dominated by WiMAX solutions. There were a few rural U.S. WiMAX deployment announcements during the show, and some suppliers are promoting WiMAX as “shovel-ready” technology, meaning that it is ideal to stimulate the U.S. economy! Finally, there are lots of WiMAX deployment opportunities in the developing world, such as India, and I have heard a target of 100 new WiMAX operators this year.

Femtocells are maturing and getting ready to be deployed by major operators. Verizon, Sprint and AT&T are completing their Femto trials. Show floor had several Femtocell suppliers and demonstrations of collaborations across the industry, primarily focusing on fixed mobile convergence (FMC) theme. There were 3G, WiMAX as well as LTE versions of the Femtocells. In my mind, pricing / cost is still the major issue!

In the handset space , the most exciting things happening are with the Smartphones . Even though only 13% of the new phones were Smartphones in 2008, this number is expected to be 23% of the new phones in 2013 (which is 300M Smartphones); this represents a 95% growth over 4 years. iPhone was, no doubt, the star of the show, being mentioned by some speakers as stealing the show, or being compared to as the reference Smartphone of the industry. However there were few other interesting Smartphone developments. Palm’s Pre, which will be launched by Sprint in the coming months, looks very exciting, with its touch screen and iPhone like UI. I was told that Palm and Sprint were demonstrating Pre’s many apps to a friendly audience behind closed doors! It will be Sprint’s major opportunity to compete with AT&T’s iPhone, provided that it is offered at a reasonable price. Incidentally, Nokia was displaying the thinnest Smartphone, e71x, that is similar to Blackberry, and will be launched on AT&T network next month.

LG booth, which was one of the best booths at CTIA, had several interesting handsets, but the most elegant was the 3G touch-screen wristwatch phone GD910, with its video conferencing capability (007 style!), expected to be available later this year. Price is unknown, or secret!

One of the most interesting presentations was given by Dr. Eric Topal on how wireless technology is completely making over the way the healthcare industry operates. First, he demonstrated how wasteful and inefficient U.S. healthcare system is, and what wireless technology can / should do to personalize delivery of healthcare. He quoted wireless wrist monitors, video transmissions from ambulances to ER rooms, wireless sensors placed in the bottom of shoes, pills with wireless technology that can deposit the medicine in the specific areas of the body & activated at the prescribed times. Interestingly enough, healthcare is one of the industries that is receiving U.S. government’s economic stimulus money, and thus one of the economic bright spots in the industry.

Mobile messaging continues to be a major traffic growth area. I have heard that we have surpassed 2 Trillion mobile messages per day, globally. In the U.S., where texting was not popular until recently, over 1 Trillion text messages were sent during 2008, an unthinkable number just a few years ago! Lots of messaging companies are focusing on new applications such as mobile payments / banking, M2M apps, LBS apps, etc. However, mobile messaging is taking a new direction in the light of Facebook, MySpace, IM, Twittering, etc. I was tweeting during the CTIA show! By the way, social networking continues to be a major area of interest for mobile Internet users. Currently about 16% of most active social networking users are accessing via mobile, and this number is expected to mushroom in the coming years.

There were several Green initiatives that were in display; solar panel or fuel cell powered base stations, handsets made from recycled material, biodegradable packaging, handset recycling programs, or solar-powered chargers, etc. There were presentations from major manufacturers and operators articulating their environment-friendly green programs. However, one of the interesting award winners in the Green category was a Smartphone application from ViralMesh, called ShopGreen, that tracks and logs your eco-friendly activities. You should try it!

Finally, Al Gore was the closing day keynote speaker; as expected, it drew a large audience. His theme was smarter planet, and he emphasized that wireless industry holds the key to climate change, and could be a core element of smart grid. He acknowledged the environment-friendly steps wireless industry is taking, but ask that a lot more needs to be done. He finished with an African proverb: “if you want to go quickly, go alone. If you want to go far, go together. We need to go far… Quickly.”

How Apple impacts the Wireless World?

iPhoneWhile the world is in the midst of major economic problems, I want to contribute to MOCOM 2020 with some positive stories. I believe Apple has made and continues to make significant contributions to the development of the wireless industry. This is acknowledged by partners and competitors alike.

After the less than stellar MacWorld 2009 in San Francisco earlier this month, and in particular, after Steve Jobs’ announcement of taking a 6-month medical leave of absence, Apple’s stock took some losses. However, this week Apple announced their 2009 Q1 results, with record quarterly revenue of over $10 billion and record quarterly net profit of $1.6 billion. Thus, Apple’s future looks as bright as ever, and their flagship wireless product, 3G iPhone as well as iPhone apps on iTunes will continue to have a huge positive impact on the global mobile market.

You may recall that 3G iPhone was launched globally on July 11th, 2008. Within the first 6 months, around 12 million 3G iPhones have been sold, with significant majority in the U.S., to AT&T subscribers. However, as of now, iPhone is available in over 80 countries, through more than 100 mobile operators. So, it truly is a global product. Smartphones are the most important handset category to observe in the developed mobile markets. The features of 3G iPhone in particular are having major impacts on the direction of the smart phones.

The multi-touch screen of iPhone has revolutionized not just the handset screen market, but has also triggered a major momentum towards touch screens for all sizes of display. We are experiencing a dramatic change in behavior: when you see any type of screen in your daily life, you will first “touch” it, and if it does not respond, you may anticipate that there is something wrong with that screen! Bottom line is, we will see some new innovations, cost reductions, and new applications around “touch screens” in coming months / years. It is not outrageous to predict that non-touch screens may go the way of black & white screens! On 3G iPhones, we have both an all-you-can-eat 3G mobile Internet flat-rate and Wi-Fi connectivity.

This combination has significantly increased mobile Internet usage in the last 6 months, especially in the U.S. As of today, about 50% of all mobile Internet access in the U.S. is through a 3G iPhone, including the use of it through Wi-Fi access. Browsers on other smartphones including BlackBerry and Windows Mobile have followed suit and beefed up their feature sets and capabilities recently. So much so that we now have a serious debate as to whether it will be the browsers that will win the battle of mobile content, or the downloaded mobile apps. It is interesting that browsers on handsets may owe their recent success to Wi-Fi capability on the handset! In fact, Apple may be approving 3rd party browsers for iPhone, but this may have some strings attached!
The combination of assisted GPS, large screen and various mapping & navigational apps have made 3G

iPhone one of the most exciting personal navigation devices (PND). This is not only triggering various other mobile devices to take on the PND role (both on-vehicle and pedestrian), but also opening up numerous location-based retail and advertising services, creating significant excitement and an effective value proposition around LBS. Maybe, after waiting for so many years, LBS is finally here, and iPhone has been a major enabler for this market.

One of the major frustrations with 3G iPhone has been the battery or power management. It is fair to say that if you use most of the features of iPhone, you may have to charge it multiple times during the day. Alternatively some important features such as 3G, GPS or Wi-Fi may have to be turned-off to conserve battery, which defeats the purpose of iPhone. However, frustration with the iPhone battery has enabled various innovations around back-up batteries, new battery technologies and power management solutions.

In fact, there is hope that iPhone 3.0 (which is rumored to be targeted for June or July 2009) may have some improvements in power management. Other rumors for iPhone 3.0 include 3D graphics, with the use of quad-core CPU, offering an excellent platform for new gaming apps. Yet another expectation is an iPhone Nano, also targeted for summer this year, to be smaller and cheaper, originally focusing on the Chinese market. It is fair to say that both 3D iPhone and iPhone Nano would be trailblazers, setting major new trends in the wireless market!

Application developers generally wonder which platform to focus on for their development. Sometimes (not always) numbers speak for themselves! Apple has launched the App Store for iPhones in iTunes on July 11th 2008 with only 500 apps, (about 150 of them free); In December 2008, this number exceeded 10,000 apps (which is a remarkable and record-breaking number to achieve within 5 months). In addition, in the same period, 500 Million application downloads to iPhones have occurred. That is about 100 Million app downloads per month!
One of the reasons for iPhone app success was the remarkable ease of app development with SDK and open APIs. Apple’s single OS X platform offers a much bigger global target market, which attracts more developers. Lots of iPhone apps are free, but for those that cost some small amounts, Apple is reportedly giving 70% of the revenues to the app developers. This is a very significant enticement!

YouTube has been one of the flagship mobile apps on iPhone; in fact, YouTube on iPhone has been credited for the ground-breaking take-off of mobile video streaming in the U.S. It is one of the most advertised, most sexy apps and one of the most used multimedia apps on iPhone. It has triggered far more interest in the use of mobile video as well as mobile TV. When mobile TV becomes more prevalent on handsets soon, it will be partially thanks to YouTube success on iPhone.

Social networking apps on iPhone are probably the ones that take advantage of the GPS feature of the handset the most. Instant messaging / chatting, locating friends, but most importantly, staying on-line with YouTube, MySpace and Facebook all-day long, and for professionals staying connected with LinkedIn or Plaxo while on the go, are all new possibilities, that were not feasible just 6 months ago (unless you carried a laptop!) We should expect tons of more innovative new apps in this space, as more and more user demographics are introduced into mobile Internet.
In fact, one major area of innovation we should look forward to is secure mobile applications, i.e. anything from mobile signatures, mobile banking, to mobile money transfers. There are already various but limited services and apps out there, but this is one market that will grow dramatically in the coming months or years. Smartphones such as iPhones are particularly suitable since they can offer levels of security but also significant ease of use.

One type of iPhone apps that I personally use frequently is the on-device portals. They provide me with all sorts of latest news, downloaded periodically, which are ready for me to read whenever I have the time to do so. Going forward, we should expect various innovations around on-device portals. iTunes is one of the most successful digital content delivery platform in the world. It has been reported that to date, more than 6 billion songs have been sold through iTunes. Apple’s recent announcement that iTunes content becomes DRM-free, with variable pricing, will further help to increase the delivery of digital content, including to those iPhones. Even though, there may be challenges to Apple from some Hollywood studios & record labels, this game-changing initiative may drive the whole multimedia industry toward simpler, more innovative and DRM-free digital content delivery business models. For the mobile industry, 2009 is expected to be the year of applications. It is the applications where the user excitements are at; it is the applications that will justify and drive the deployment of wireless broadband / 4G networks in the future; and it is the applications where ultimately the money is.

That is why, when a new platform is being deployed, such as iPhone last year, or more recently Google’s Android based G1 phone, it is the applications that attract the most attention. It is fair to say that, for G1 to succeed, innovative Android-based applications will be absolutely critical.
The vertical integration of handsets and applications is not limited to Apple. In fact, Nokia with OVI, has been innovating similar apps and content delivery solutions, through mobile operators. Nokia’s Comes with Music, albeit currently limited to a few Nokia devices, offers some revolutionary business models. Nokia is already working on Comes with Video. RIM is reportedly working on launching a similar music store for Blackberry, in the next couple of months. Also, Google is working on Android Market as the app store for the G1 phone.

Finally, even though the world is facing some severe economic difficulties, Apple is in a very healthy position. They have over $25 billion cash reserves, 35% gross margins and thus they have the financial means to maintain leadership in innovation and market deployment of iPhones. Apple has a VC fund that they use to steer innovation and applications. Some analysts are predicting around 77 million iPhones deployed in the next 4 years, and that Apple would grab the smartphone market-share leadership from Nokia, by taking 40% of this prestigious high-margin market. Also, the vertical integration with their iTunes App Store will give Apple a strong standing, and will allow Apple to influence the future direction of the wireless industry as a whole. Whether these predictions are right or wrong, it is fair to expect that Apple, iPhone and iTunes will play a major role in the near future of the wireless industry. Especially Apple’s willingness to adopt disruptive, game-changing technologies and business models, should give everyone in the wireless industry, reason to monitor closely what Apple is doing!