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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.”