The 2014 Wrap and 2015 Mobile Industry Predictions
Here we go once again: another 2015 prediction article. This is my 8th annual predictions blog posting and I can say it never has been more difficult to prognosticate on where this industry is headed. Mobile in the context of an operating environment has never been more important to consumers and businesses, worldwide. Today, if a business or enterprise does not include mobile engagement as a priority, then I believe they are behind before they even begin.
As we do every year, before I offer my 2015 predictions, we take a look at my 2014 predictions to see if I was even close on a few of these. For the record, in 2012, I was 66% correct and for 2013, I was 75.5% correct.
Was 2014 an improvement? Read on!
1. By the end of 2014, over 300 networks will have launched LTE services. Additionally, at least 25 will have launched some capabilities known as LTE-Advanced. Another way of putting this prediction is that LTE will be more mainstream than not by the end of 2014. By the end of 2014, at least 100 LTE networks will have launched LTE roaming with one or more other networks.
2014 Reality: According to the Global mobile Supplier Association (GSA), at the end of 2014, there were 360 networks in 124 countries, commercially launched. Additionally 49 networks in 31 countries were launched. In terms of LTE Roaming, there are now over 150 mobile operators who have deployed LTE Roaming through one or more of the LTE Roaming hubs that operate in the market today (including SAP Mobile Services’ LTE Roaming solutions). 100% Correct.
2. Mobile OS wars continue with Android and iOS leading the way. But, we will also see market share gains from Windows and Firefox. Firefox will move ahead of the dying Symbian and bada. Blackberry will remain in 4th place.
2014 Reality: In terms of Smartphone OS market share (Source: Tomi Ahonen Phone Book 2014), Android leads the way with a global 75% market share (from 64%); iOS with 18% (down from 19%), Windows is 3rd with 2% (down from 3%), Blackberry remains 4th with 2% (down from 5%). Firefox did not exceed Symbian; however, it was offered by 14 operators in 28 countries around the world. Call this 70% correct
3. In terms of consolidation and acquisitions, 2014 will be the year that T-Mobile USA will be acquired or merged with another entity (not necessarily a mobile operator). Additionally, we’ll see two or more Messaging-oriented OTTs merge and/or be acquired by a larger non-messaging party.
2014 Reality: T-Mobile USA was not acquired by anyone; however, Sprint was in the running for most of the year. But this prediction has multiple parts. WhatsApp was acquired by Facebook for $19 billion and the Japanese ISP company, Rakuten acquired Viber for $900 million. Messaging apps were hot in 2014 with valuations such as $10 billion for Snapchat. Since I missed the T-Mobile part, call this 50% correct.
4. The new iPhone (will this one be the iPhone 6?) will not incorporate NFC; but will sport a larger display, with more capabilities (both for device and infrastructure support) for iBeacon to become a secure payments channel. Additionally, a single model will be released for the world, supporting all major LTE bands so that any device would have a better chance of roaming to more markets.
2014 Reality: To start off with, I should have known better than to try to predict when and how Apple would roll out point-of-sale payments. They did it with the iPhone 6 and with NFC. The iPhone 6 and 6Plus does have larger displays and a host of new features (NFC, Health, VoLTE and of course Apple Pay). iBeacon is a growing tool for consumer engagement by retailers; however, it is not part of the payment capabilities, yet. There are actually 3 versions of the iPhone 6 and 6+ to account for core differences in CDMA and GSM networks, but all versions support 16 LTE bands and the Models A1586 and A1524 support 20 (adding some TD-LTE bands). The iPhone 6/6Plus is designed for roaming. I got the NFC prediction wrong, but everything else right. Call it 80% correct.
5. Mobile messaging (standards based: SMS, MMS, RCS) will remain strong, with continued growth in some markets and it will see a resurgence in other, previously declining markets, due to new operator initiatives to revise pricing and features (including supporting more “cloud” messaging, integrating OTT-type services into the mix). In some markets, landline texting will enable new channels for SMS for both P2P and consumer engagement.
2014 Reality: Standards based messaging (specifically SMS/MMS) did not fall off a cliff as some have predicted. In the United States, SMS volumes grew slightly over late monthly 2013 volumes. In emerging markets, the usage of SMS has not diminished substantially, even though non-SMS messaging options are becoming more available. There is growing evidence that while many subscribers are using non-SMS messaging apps such as WhatsApp (over 700 million MAUs), they still use SMS for engagement with brands and enterprises. In the United States, where some service providers are supporting landline and toll-free numbers for texting, the traffic grew over 900% from January to December, 2014. 85% correct.
6. Non-SMS OTTs will grow less and some will come under pressure to monetize their existence. This messaging market segment will see some volatility, due to non-interoperability policies, too many “islands,” free or freemium pricing models. They will become more and more open to operator and inter-operator interworking, along with SMS interoperability. There will be some consolidation in this market segment.
2014 Reality: Some did and some didn’t. Certainly WhatsApp grew to 700 million MAUs by the end of 2014; Facebook Messenger topped 500 million users. But the popular messaging app Snapchat seems to have peaked at 25 million users in May, followed by declines. Towards year-end, they stabilized around 21 million monthly active users (per Comscore data). Additionally, Snapchat began supporting advertising to help create some revenue. Messaging apps Tango, Line, and WeChat have expanded to be more social media platforms, but have also opened up to marketers to create some revenue. 100% correct.
7. Consumer engagement via multiple mobile channels will increase. Standards-based mobile messaging (SMS, MMS, and RCS messaging) for consumer engagement (e.g. A2P messaging) will increase. Other channels including push, social networking via mobile, and others will also grow as well.
2014 Reality: Multi-channel consumer engagement has become in the norm with many marketers supporting push (through their apps) as well as mobile messaging. Standards based messaging – especially SMS and to a lesser extent, MMS, continue as a key, simple channel to reach consumers. RCS implementations have had no real engagement solutions of note. Mobile “wallets” such as Apple Passbook and Google Wallet are becoming popular as a means of reaching and engaging consumers. Of course, social network through mobile devices on Facebook, Twitter, as well as some of the social messaging platforms like WeChat and Line are also new channels for marketers. Calling this 90% since RCS was predicted, but no real traction.
8. IPX will take on new significance in 2014 as the Internet of Things grows and becomes more prominent. Many devices would only be reachable via mobile networks; therefore, the cloud applications supporting and communicating with these devices will need the security and quality of an IPX.
2014 Reality: IPX did indeed take on new significance in 2014; however, the increase in usage was around LTE Roaming, support for VoLTE, as well as increased usage of LTE Voice routes and other MNO-specific solutions. The Internet of Things (IoT) continued to make headlines – in fact IoT products were major headliners at CES 2015; however, the cloud solutions supporting IoT have not yet benefited from the value gained by integrating these solutions with the quality of service that an IPX provides. The marriage between IPX and IoT did not happen: 0% correct.
9. Mobile data pricing falls in major, developed markets around the world, due to higher usage and better network capacity control. With more complete roll-outs of LTE networks as well as newer LTE-A network capabilities, network capacity becomes less of an issue than before. Mobile operators will also provide newer services to better compete with basic services (voice, messaging) now being provided by OTTs.
2014 Reality: In the United States, a data price war erupted with all major MNOs offering substantially lower pricing for mobile data (sometimes by half) – and not charging a premium for LTE as has been the case for some European operators. In the UK, the MNO 3 “challenged the notion that next generation superfast 4G networks should come at a premium price by giving it away to its customers in their data tariffs” [Financial Times]. In some emerging markets, MNOs are now providing unlimited access to popular apps such as WhatsApp or Twitter. Network capacity issues have been mitigated with LTE rollouts and VoLTE seems to be the service of choice for many MNOs in their attempts to hold onto some service revenue. 100% Correct
10. Security and privacy issues around mobile devices, applications and services will continue to gain prominence. In 2014, we will likely see security incidents damage the reputation, if not greatly degrade popular applications and services. Conversely, many services will cite security and privacy controls as major assets of their app or service.
2014 Reality: Security, privacy, hacking attacks as well as consumer confidence in a variety of payments, online, and mobile capabilities leapt into headlines during the last year. Snapchat’s reputation was heavily damaged with accusations that their disappearing images ended up hacked and leaked (through the usage of 3rd party services). Many vendors and services fought back. WhatsApp responded with encrypted messaging. The iPhone 6/6+ as well as iOS8, boosted security. One of the most prominent reasons cited for Apple Pay was the inherent security that it provides consumers when completing purchases– especially in light of the hacking attacks that plagued retailers such as Target and Home Depot. 100% Correct.
Overall Score for correctness: 67.5% Last year was a tough year to forecast in terms what fireworks this dynamic industry would foretell. As I write this, news broke that Blackberry was in talks to be acquired by Samsung; however, just as fast, both companies denied that there was any pending agreement. But it was enough to make headlines throughout the industry and cause significant speculation. T-Mobile USA wasn’t acquired; however, UK operator Everything Everywhere agreed to be acquired by BT (pending final approval). Consolidation, acquisitions and mergers always make good headlines, but they are difficult to predict.
Okay, 2015 is just underway and the table is set. What will make headlines and provide lots of content for analysts, journalists, and guys like me? Let’s get to the main course!
In no particular order:
- Messaging continues to evolve as the number 1 used service – whether that is through SMS, non-SMS messaging apps, or in contextually-specific circles. SMS as a medium will continue a slow decline, worldwide as a P2P channel. In the United States, overall SMS traffic will drop slightly (no more than 3% Year over Year) mostly due to larger iOS market share (iMessage effect).
- Messaging as a consumer engagement channel, including SMS will remain a bright spot with more growth as consumers realize the benefits of simple notification messages. Other channels (e.g. push notifications, mobile wallets [e.g. Passbook]) will be used more intelligently by marketers to reduce push-notification fatigue that many smartphone users experience.
- Contactless payments will grow substantially in 2015, with dozens of retail chains launching NFC Point-of-Sale support to benefit users of Apple Pay, Google Wallet, Softcard and other similar payment initiation solutions – not only in the United States, but in many markets around the world. In top markets, usage among enabled smartphone users will top 15% by year-end. The alternative, CurrentC will launch; however, several retail chains will drop out of the Merchants Consumer Exchange (MCX) in favor of NFC supported solutions. Square will deliver Apple Pay compatible solutions in 2015.
- More messaging consolidation in store for 2015. One or more of the independent non-SMS messaging providers will be acquired by a non-messaging company. The benefits of social messaging will be too much to ignore for the rest of this decade. Starting in 2015, more contextually-specific online solutions will include various styles of P2P messaging – all with specific benefits for mobile users.
- As privacy and security concerns are belayed, more marketing and analytic solutions will be able to use anonymized mobile meta-data to provide unprecedented views on consumer engagement and behavior through mobile device usages. This will lead to more targeted and less intrusive consumer engagement through mobile by using new and innovation solutions such as beacons, messaging, and location-enhanced apps. All of this data (truly “big data”) will help retailers, marketers, and even MNOs have much better, more reliable visibility into what consumers are doing.
- Mobile device OS rankings will not change appreciably in 2015. Android, iOS, and Windows will remain in the top 3; however, Tizen and Firefox will eclipse Blackberry. As the iPhone 6/6+ continues to grow, global iOS market share will grow up to 5 percentage points and drop slightly by year-end.
- The current wearable glut will begin to filter out the winners from losers. Apple Watch will do very well – popular variations will sell out and the Apple Watch will become a new platform for a variety to innovative solutions. Headlines will be made. Other, less functional or very function-specific wearables will quietly disappear. One or two Apple Watch primary rivals will emerge. These “watches” and wristbands won’t just be for fitness anymore.
- LTE network deployments will top 450 operators by year end, with over 250 networks available for LTE Roaming. By year end, there will be more than 80 networks, worldwide that will have deployed LTE Advanced. Many European operators will abandon premium pricing for LTE networks – instead bundling all 3G/LTE into one data rate plan.
- Blackberry will show some growth in 2015. If they are not acquired (notwithstanding the Samsung / Blackberry rumors as I write this). Apple will introduce their annual upgrades to the iPhone 6 devices (the 6s / 6s Plus?), which will help people move from iPhone 4/5 to 6/6+. Samsung and other Android stalwarts won’t be left behind. Even Sony may come back strong.
- Mobile networks will play an increasingly important role in the Internet of Things (IoT) solutions – from specific network access support to SIM-enabled devices. Apple HomeKit will shake up the fragmented connected home/home automation marketplace; however, other solutions will help bring some interoperability into the picture enabling HomeKit to support various home automation standards such as Z-Wave, Insteon, and others.
“Mobile” is now an integral part of our lives – some more than others. If you are like me and a participant in this industry, we tend to be early and heavy adopters – embracing all of the benefits that usage of mobile devices bring us. In a way, we try to be extreme examples to others that benefit and leverage this expansive industry, but don’t play a role in the directions that it might take. I believe 2015 will be a transformative year for many services – messaging for one – is very fragmented, but very strong. Smart devices are here to stay and will just get smarter and more useful leveraging ecosystems such as cloud solutions for more “informed” data. Stay tuned as always, because you won’t want to miss a minute!