As mobile operators invest heavily in 4G networks, the question remains how operators will maintain profitable business models and differentiation as the demand for data consumption grows exponentially. The demise of mobile operators by way of the dumb-pipe syndrome has been debated for...

By Carl Howe, Research VP, and Eugene Signorini, Senior VP of Research BlackBerry-maker Research In Motion (RIM) has finally made changes at the top. On Jan. 22, it announced: Current co-CEOs Mike Lazaridis and Jim Balsillie will step aside. Mike Lazaridis has become vice chair of RIM’s board and chair of the board’s new Innovation Committee. Jim Balsillie remains a member of the board. Current co-COO Thorsten Heins will become CEO. Heins joined RIM from Siemens AG in December 2007 as senior VP for hardware engineering and became COO for product and sales in August 2011. Barbara Stymiest will take over the role of board chair. Stymiest formerly served as a member of Royal Bank of Canada’s Group Executive and has been a member of RIM’s board since 2007. She will be the sole chairperson of the board, replacing co-chairs Lazaridis and Balsillie.  RIM will search for a new chief marketing officer (CMO). During the analyst conference call on Monday, Jan. 23, Heins also announced that RIM will hire a new CMO. This CMO is expected to not only head up RIM’s advertising and messaging, but also make the company more marketing-driven and consumer-oriented.  With this leadership change, RIM makes it clear that its core strategy of selling integrated products and services isn’t changing; Heins will instead focus on better execution of that strategy. Yankee Group believes these changes are long overdue. We think they are important because the leadership change will buy the company time, Heins is a good fit for the CEO job and the business desperately needs a better marketing strategy. But RIM needs to change more than some titles. To be successful, Heins must not only execute on the current RIM plans, but also: Stop the erosion of its customer ...

By Declan Lonergan, Research VP, Yankee Group The years of dramatic growth in MBB connections were achieved during the period from 2007 to 2009, with annual growth rates of 184 percent, 120 percent and 73 percent respectively. During 2010 and most of 2011 there was a significant slowdown in growth rates—to 39 percent in 2010, and an expected 21 percent in 2011.  Despite this, the MBB market is not yet fully mature. During the next four years the average rate of MBB penetration in Western Europe—measured as a percent of the total population—will increase from less than 8 percent at the end of 2010 to more than 14 percent by 2015. One of the key drivers of this sustained growth will be the emergence of the connected tablet category. Tablets Provide a Boost The MBB market will receive a timely boost in the form of new connected device categories. The most important of these is tablets, but others such as MiFi devices (though not such a recent development) will also be important. The installed base of tablets in Western Europe will increase from 5 million in 2010 to 77 million by 2015, according to Yankee Group’s Global Mobile Forecast, December 2011. It’s important to note that our MBB market forecast includes only those tablet devices with an active cellular/mobile connection; Wi-Fi-only devices are excluded. Nonetheless, we expect a significant contribution to the overall total to come from tablets. This represents a new category in addition to cellular-connected laptops and netbooks. Europeans’ underlying demand for MBB connectivity is clear and compelling, and it is not going away. However, no technology market keeps increasing indefinitely. The growth drivers we discuss will be balanced by some important factors that will restrict demand. The most significant of these ...

By Declan Lonergan, Research VP, Yankee Group Mobile operators have learned to live with subscriber churn. Despite major efforts over several years to reduce churn rates, recent market evidence points to an increasing rather than a decreasing churn trend. It costs operators a lot less to retain an existing customer than it does to win a new one. Consequently, MNOs must continue to innovate in churn-prevention measures to ensure avoidable churn is maintained at as low a rate as possible.  The following natural market phenomena create churn events and will always pose challenges for MNOs: Prepaid inactivity. Unlike services that involve a contract between the provider and the customer, prepaid introduce problems when MNOs report customer numbers and churn rates. The key is the period of inactivity that must elapse before the MNO stops counting the prepaid line as an active customer, and instead adds it to the churn statistics. Because prepaid customers can switch between providers relatively easily, prepaid churn rates are substantially higher than those for postpaid. For example, in Q2 2011 Orange France reported prepaid monthly churn of 4.3 percent compared to 1.3 percent among postpaid customers. These values are typical of most MNOs in the region. Migration to smartphones. Every time one operator wins exclusive access to a particular device—most notably the iPhone—its competitors are challenged to prevent their customers from switching network. As migration to smartphones gathers pace, the churn-prevention challenge will become more acute.  Competitor activity. Despite all the excitement surrounding new devices, advanced features and next-generation network technologies, good old-fashioned competition between operators and MVNOs is what keeps churn rates stubbornly high.  Economic circumstances. We can’t discuss churn without referring to prevailing economic conditions. During 2009 and 2010 the recession in Europe certainly didn’t help the subscriber ...

By John Keough, analyst, Yankee Group While mHealth has always been a darling of the connected device industry, it has often been considered too laden with regulatory burdens and business model baggage to take off anytime soon. But the health care industry is making marked moves in that direction. The recent 2011 Foundation for the National Institutes of Health (FNIH) mHealth Summit showcased several substantial commitments from large players in the industry, increased involvement of large-scale solution providers, and an overall optimism that given a few substantial changes and added incentives, the potential benefits of mHealth applications can soon be realized. Three interesting themes resonated throughout much of the show: hubs, reimbursement models and data management. Hubs: Qualcomm stole the show with its announcement of the 2net hub and supporting platform. The hub contains cellular modems and provides connectivity to peripheral mHealth devices throughBluetooth,Wi-Fi and ANT+, greatly simplifying connectivity issues for device manufacturers. The hub concept is not new in the mHealth space (other companies including Ideal Life have promoted the concept for a few years), but Qualcomm’s 2net is one of the first technology-agnostic offerings, while past offerings have generally been tied to a specific carrier. Using a hub with multiple cellular chipsets embedded in it will allow solutions providers to offer an end device with more complete cellular coverage and greater billing flexibility for the end-user. Reimbursement: Under the current fee-for-service payment system utilized inU.S. health care, doctors are reimbursed on a per-service basis, and hospitals are reimbursed per patient admission. While this encourages doctors to be thorough in their examinations, it also can create an economic incentive to perform unnecessary examinations. Some discussions centered around an accountable care organization (ACO) model, which pays care providers based on quality-of-care indicators and minimizes overall costs.  While ...

By Carl Howe, research director, and Ken Rehbehn, principal analyst, Yankee Group In August, Yankee Group predicted the market concentration and higher prices created by the proposed merger between AT&T and T-Mobile would require regulators to block the deal (see the August 2011 Yankee Group report “AT&T/T-Mobile Merger: More Market Concentration, Less Choice, Higher Prices”). AT&T has now withdrawn its offer for T-Mobile, and the big question facing both companies now is: How can they move forward? Yankee Group believes both companies have viable options for surviving and thriving in the years ahead. Those options, however, will require both firms to think differently about how they run their businesses. The acquisition’s failure means both parties remain starved of the higher-capacity, well-situated spectrum assets needed for effective future competition against formidably positioned Verizon Wireless. This means: AT&T must find spectrum capacity to compete with Verizon Wireless. Though little to no spectrum remains available for purchase today following Verizon Wireless’ buyup from SpectrumCo and Cox, AT&T can invest heavily in areas with thin spectrum positions to expand the number of base stations while reducing the size of each cell sector. AT&T needs to press Ericsson and Alcatel-Lucent for these small cell solutions sooner rather than later. T-Mobile must take a stronger position against Sprint. When we examine T-Mobile and Sprint holdings in prime spectrum real estate (PCS and AWS), T-Mobile holds a competitive advantage over Sprint today (T-Mobile with 53 MHz of PCS/AWS spectrum compared to Sprint’s 38 MHz of PCS spectrum). Adding anywhere from 10 to 17 MHz of new AWS spectrum from AT&T extends that lead.  AT&T must think beyond the separation roaming agreement. As an alternative to moving toward smaller cell sectors, AT&T should consider forming ...

By Sheryl Kingstone, research director, and Brian Partridge, research VP, Yankee Group A mobile ecosystem firestorm started recently after security researcher Trevor Eckhart discovered that Carrier IQ’s software, running on his HTC Android device, was capturing the log files associated with keystrokes, phone numbers dialed and several other user actions—all without the explicit knowledge of the end-user. After Eckhart posted a YouTube video of the apparent keystroke logging and the difficulty in actually locating and removing the software, Carrier IQ was being labeled everything from a secret stalker to an evil genius out to collect and transmit personal user data to unnamed customers, who in turn could use it for any ends they wished. The truth at the heart of this scandal is far less nefarious. There is no evil here—only mistrust.  Yankee Group is a vocal advocate of the mobile ecosystem’s focus on improving QoE, as we believe user experience is the competitive battleground where customers will be won or lost in the future. In covering developments in this area, we have followed Carrier IQ’s intentions and planned use cases, and we believe Carrier IQ is, in actuality, helping operators improve the quality of experience (QoE) customers have on their networks.  Carrier IQ’s software is used by carriers such as Sprint and AT&T to collect and report network and device-specific data metrics to help them architect and optimize wireless networks and gain the critical device and user intelligence required to provide excellent customer care.  Consumers view consistent network service performance, fewer dropped calls/interruptions of service and consistent speed as the top three ingredients to ensure a positive network experience. Until now, no one cared to ask how the ecosystem met customer expectations.  While network operators struggle with data traffic growth and ...

In its new report “2012 Mobility Predictions: A Year of Living Dangerously,” Yankee Group looks ahead to 2012 and sees the mobile industry preparing for a year of uncertainty and global transition. As the fiscal balance tips to new economies, mobile players must adapt quickly or disappear. In 2012, mobile workers and consumers will embrace tablets, mobile content, mobile video and personal cloud services at unprecedented levels. At the infrastructure level, operators will feel the squeeze and look to new policy solutions to help them monetize all-IP networks. Amid these shifts, even Internet players must prepare for a year of change that will create new challengers for industry leadership.  “The world is in transition and in the year ahead, mobile will be both the protagonist and subject of this instability,” said Jason Armitage, senior analyst and co-author of the report. “The winners in this evolving landscape will be those players that can capitalize on the global mobile gold rush and treat each user as a unique customer.” The full report is available for free download at http://web.yankeegroup.com/report2012PredictionsRegistration.html  Yankee Group's 2012 mobility predictions are: Asia will beat out both Europe and the U.S. in tablet sales. Asia-Pacific will see almost 39 million tablet sales next year. RIM will fend off Nokia/Microsoft to stay in the smartphone top 3. RIM smartphones will continue to account for more than 1 in 4 smartphones in U.S. enterprises and will remain in double digits with U.S. smartphone owners. Android will make it a consumerization triumvirate in the enterprise. It will go from a third-place position to an even share alongside iPhone and BlackBerry. Emerging markets operators will invest more in HSPA+ than LTE. They will embrace the chance to get headline speeds for a software ...

By John Keough, analyst, Yankee Group For many applications in the machine-to-machine (M2M) industry, 4G connectivity, be it HSPA+, LTE or WiMAX, seems like an unnecessary upgrade. For consumers using devices such as smartphones and tablets, the benefits of 4G technology are clear: greater speeds, higher quality of service and additional capabilities. That level of connectivity seems highly unnecessary in a smart meter or a vending machine, where just a few packets of information need to be sent on a weekly or monthly basis. For this reason, more than 90 percent of current cellular M2M connections use 2G technology. Additionally, many M2M deployments use the fixed line connectivity often available in retail, industrial, hospital and financial settings. However, three major trends are pushing traffic toward 4G networks: Carriers will eventually repurpose 2G spectrum in support of more advanced networks. M2M connections will likely come along for the ride and enjoy more efficient and secure transfers over advanced networks. 4G connectivity will enable greater mobility and high-bandwidth streaming. These capabilities are crucial in application areas such as digital signage, mHealth and security. 4G technology will power the next generation of layered M2M applications. A more robust connection will allow for the evolution of M2M from the support of a single, simple application to leveraging one connection for multiple uses. Although network carriers are still connecting new 2G deployments on a case-by-case basis, few are guaranteeing long-term support of 2G networks past the 2020-2025 time frame. 3G is quickly becoming a baseline expectation of today’s consumers, and as a result, mobile network operators will need to reduce radio resources currently reserved for 2G technologies. M2M applications use very little data. In fact, according to cellular smart meter provider SmartSynch, if all 300 million meters active in the U.S. transmitted a ...

By Ken Rehbehn, principal analyst, Brian Partridge, research VP, Vince Vittore, principal analyst, and Sheryl Kingstone, research director, Yankee Group Nokia Siemens Networks (NSN) newly announced restructuring plan focusing its business on mobile broadband (and cutting 17,000 employees from its global rolls) is a step in the right direction as it bolsters the company messaging and stake in its Liquid Network strategy, but it requires excellent execution and improved market trust to succeed. Overall, NSN is focusing on mobile broadband and customer experience, while better aligning its managed services, consulting, network analytics, system integration and optical network businesses, and divesting or managing for value its WiMAX, BSS, fixed-line VoIP, narrowband, communications/entertainment, broadband access and carrier Ethernet sectors. Yankee Group believes NSN is: Positioning to recapture mobile infrastructure market leadership. As Huawei and ZTE appeared in networks formerly operating as showcase NSN operations, the mindshare enjoyed by NSN has waned. The company's renewed commitment to mobile broadband and customer experience management can help rebuild its stature if NSN produces proof of innovation and significant deal wins beyond its legacy customer base.  Positioning to build on success in customer experience management. NSN wants to focus its network expertise around quality of service (QoS) to help operators generate a deeper understanding of subscriber needs through the use of device performance and network usage data enriched with demographic and other subscriber-specific data gathered from Web, CRM, billing and other systems. However, improving the customer experience goes far beyond providing a consist QoS; NSN will need to use its assets and build on expertise beyond its core network strengths. Risking its leadership position in mobile voice and messaging. With over a billion subscribers and over 220 customers, NSN has a leading position in the mobile soft switching (MSS) space. On the IMS ...

By Chris Marsh, Senior Analyst at Yankee Group Employee-purchased smartphones are invading the workplace. Nearly one-quarter (23 percent) of employees plan to purchase a smartphone on their own for work purposes in the next 12 months, according to Yankee Group’s 2011 US Enterprise Mobility: Employee Survey, Wave 2. The survey also finds 60 percent of smartphones in the enterprise are being selected and purchased by employees rather than corporate IT buyers—and that percentage is growing.  Unfortunately, end-users who purchase smartphones for work purposes tend to find them wanting when it comes to providing true business productivity. As a result, many employees download mobile apps from consumer storefronts in an effort to increase their device’s work productivity. If device manufacturers and carriers want to entice employees to their wares, they must begin addressing this “business app gap.” Specifically, they need to rethink their device’s out-of-the-box business appeal and balance that with providing true business/productivity applications employees can download from their specific app stores.  When it comes to the devices employees choose to use for work, our employee survey finds Apple’s iPhone, Research In Motion’s (RIM’s) BlackBerry and Google’s Android are running neck and neck: 40-43 percent of employees are considering purchasing each brand. Each smartphone’s reputation attracts different types of business-minded buyers: Android attracts younger employees. Most Android buyers are employees aged 18 to 34. They are less likely to have formal work leadership roles and less likely to have incomes over U.S.$50,000 than are buyers of BlackBerrys and Apple iPhones. Apple also attracts younger employees. Like Android buyers, most iPhone buyers fall into the 18-34 age range, but iPhone buyers are more likely to have a leadership role at work. BlackBerry attracts older employees. The BlackBerry employee ...

By Sandra Palumbo, research fellow, Yankee Group At previous 4G World events, much of the discussion focused on core networking technologies, spectrum, cell sites and backhaul. At 4G World 2011 in Chicago, attention shifted beyond just the technologies that make 4G a reality and focused much more on what impact 4G is having on the user experience, particularly with regard to mobile applications, M2M, cloud computing and mHealth. Essentially, the industry is becoming less concerned with 4G as a technology, and more concerned about what 4G enables and what truly drives 4G adoption. During the “4G Powers Opportunity for Cloud and Mobility” track, one of the more active discussions occurred during the “Mobile Cloud Applications” panel, when an audience member posed the question: Is mobile cloud just hype or is it really the way of the future for mobile applications? The reality is that mobile cloud right now comprises both hype and substance. The real frustration with mobile cloud is that the term does a severe disservice to the cloud. Given that cloud computing is about virtual infrastructure and making network-based or Web-based applications and services available from anywhere, why do we need a mobile cloud? Isn’t cloud computing by definition mobile?  The truth is in most ways it is. We use a term like mobile cloud simply to highlight the challenges the variety of mobile devices, form factors and OSs bring to application development. We at Yankee Group believe there is nothing wrong with the industry making a mobile distinction, but it needs to be done carefully so it does not take away from the real debates and innovation areas. In this case, the discussion shouldn’t be about a special cloud segment called “mobile cloud.” Instead, it needs to be about leveraging cloud as a platform to ...

By Declan Lonergan, Research VP, Yankee Group In some countries, such as the U.K., there has been a shift from prepaid to postpaid services during the past 12 to 18 months. Despite this trend, however, prepaid will remain a critical feature of the European mobile communications marketplace for the foreseeable future.  Overall, prepaid accounted for 53 percent of mobile lines in Western Europe at the end of 2010. Despite recent migration toward postpaid services, prepaid will still account for an impressive 45 percent of mobile lines in 2015. In Italy, prepaid will remain the dominant payment method, accounting for 76 percent of all lines by 2015. But is prepaid versus postpaid a valid and helpful basis for mobile customer segmentation today? Has it outlived its usefulness? It’s important to acknowledge prepaid and postpaid customers are considerably different in terms of their mobile spending behavior. Prepaid customers in Western Europe have average revenue per user (ARPU) of just €9.63 per month. This is approximately one-quarter of the ARPU level for the average postpaid customer (€37.29). But when it comes to mobile device purchase intentions and brand aspirations, prepaid and postpaid customers have quite a lot in common. In our 2011 European Consumer Survey, which was fielded during May and June, 55 percent of prepaid respondents said they were likely to buy a smartphone with a data plan within the following six-month period. This compares with 62 percent of postpaid respondents. Considering the dramatic differences that exist between these two groups in mobile ARPU, our data shows there is nowhere near as significant a difference in handset buying intentions. Prepaid customers’ appetite for high-end devices is not far behind that of postpaid users.  Because prepaid customers spend less on average than their postpaid counterparts, there is an understandable ...

The 4G World Conference and Expo came to a close today, having drawn over 8,500 registered attendees and more than 250 sponsors, including 150 exhibitors. At the close of its hallmark show, Yankee Group announced its 2012 event schedule, including 4G World Asia, which will be held April 17-19, 2012 at the Raffles City Convention Center in Singapore, and 4G World 2012, which will be held Oct. 29 – Nov. 1, 2012, at McCormick Place in Chicago. 4G World is the largest event in the world focused on the rapidly expanding 4G and mobile Internet ecosystem. This year’s conference attendees participated in more than 100 conference sessions and heard from more than 250 industry thought leaders. Keynote speeches featured industry executives from over 30 major wireless operators from around the globe who discussed their plans to deploy 4G networks and mobile Internet services. This year’s expanded program included four collocated summits: NFC Summit, 4G Backhaul Summit, Customer Experience Summit, WCAI Spectrum Summit. Some key highlights include: Customer Experience Summit: John Egan at AT&T Mobility discussed ways AT&T is taking 4G customer experience to heart, and how the company focused on improving customers’ online experiences while removing costs from the customer contact center (see “AT&T Harnesses Data to Improve Customer Experience”).  Mobile Backhaul Summit: Yankee Group’s Jennifer Pigg outlined the key characteristics necessary in future 4G mobile backhaul (see “Summit Reveals the Future of Backhaul”).  NFC Summit: Google’s Osama Bedier explained the importance of creating magical experiences for consumers as a necessary prerequisite to kick-starting the NFC ecosystem in a 4G world (see “For NFC, Success Depends on Magical Experiences”).  “With over 35,000 square feet of exhibits, incredibly engaged session audiences and a buzzing expo hall, this year’s event really showcased the ...

On the second day of 4G World 2011, held Oct. 24-27 inChicago, Yankee Group Research Director Carl Howe performed a quick analysis of Twitter tweets from the show. The upshot: Attendees on Twitter view 4G World 2011 primarily in a positive light. Taking a snapshot of 607 tweets on Tuesday, Oct. 25, Howe graphed the show’s reputation score, or the relative positive or negative feedback contained in each tweet. When graphed together, the total tweets accumulated a positive score of 88.5 percent overall for this year’s show (see Exhibit). “That’s actually a very high score,” Howe concluded. “With a base of 607 4G World-centric tweets, not all of them using the #4G World hashtag, we find that for the most part, attendees are satisfied with what they’ve seen of the show so far.” For more information, visit the 4G World Web site at www.4gworld.com