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Mobile Communication Predictions For 2014: A Frost & Sullivan Perspective
 

Mobile Communication Predictions For 2014: A Frost & Sullivan Perspective

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In 2014, mobile communications will be evolving, rather than revolving, as mobile operators (MNOs) continue to invest heavily in the rollout of next-generation infrastructure. The patent war will ...

In 2014, mobile communications will be evolving, rather than revolving, as mobile operators (MNOs) continue to invest heavily in the rollout of next-generation infrastructure. The patent war will ease, and flexible/wearable devices will start to make a dent. Perhaps the biggest opportunity for MNOs comes when refocusing business models to truly leverage their unique position as network provider, device channel, digital service provider, and—most importantly—a trusted custodian of valuable customer data in the value chain. The following trends offer a snapshot of the drivers that will shape the role of European mobile operators in a digital society.

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    Mobile Communication Predictions For 2014: A Frost & Sullivan Perspective Mobile Communication Predictions For 2014: A Frost & Sullivan Perspective Document Transcript

    • Mobile Communication Predictions for 2014: A Frost & Sullivan Perspective “50 Years of Growth, Innovation & Leadership”
    • Mobile Communication Predictions for 2014: A Frost & Sullivan Perspective Market Insight In 2014, mobile communications will be evolving, rather than revolving, as mobile operators (MNOs) continue to invest heavily in the rollout of next-generation infrastructure. The patent war will ease, and flexible/wearable devices will start to make a dent. Perhaps the biggest opportunity for MNOs comes when refocusing business models to truly leverage their unique position as network provider, device channel, digital service provider, and—most importantly—a trusted custodian of valuable customer data in the value chain. The following trends offer a snapshot of the drivers that will shape the role of European mobile operators in a digital society. Machine-To-Machine Transitioning Toward The Internet Of Things More than three-quarters of European MNOs will offer machine-to-machine (M2M) in 2014. Market entry barriers are falling as the M2M value chain accelerates standardisation in processes, products, and services. The presence of 2 MNO-driven M2M groups—the M2M Multi-operator Alliance and the Global M2M Association—further simplifies efforts to develop M2M offerings. Both alliances offer key advantages for their members, including: access to wider-network footprints, ability to leverage pre-tested and certified M2M modules and platforms for quick deployment, and economies of scale as M2M applications progress towards more standardised deployments. In turn, the increase in competitive pressures will accelerate product development and new market creation in such industries as retail and industrial automation as MNOs aim to capture a bigger piece of the M2M opportunity, beyond more traditional automotive and energy applications. The potential for an MNO to carve out a critical role in a connected society, by investing more in the IT and operational technology (OT) domains, is the start of its transformation as a digital service provider. In 2014, the focus of both IT buyers and providers shifts to the Internet of Things (IoT), as more data will be generated by machines than by human beings. The explosion of IoT activity in 2014 and beyond will be driven by the nexus of low-cost sensors, connectivity networks, cloud computing, advanced data analytics, and mobility. The first issues that MNOs will address will be reliable connectivity and enterprise-grade cloud computing services. Without reliability and performance qualities, IoT adoptions will be disappointing and affect the overall pace of development. Making Sense Of The Data Deluge Through Analytics MNOs will make greater use of their network assets and available data to apply analytics to prepare as a digital service provider. Using powerful analytics tools to take full advantage of the huge amount of data available is already common; retail and customer segmentation are the most relatable example. However, Big Data projects are increasingly viewed as priorities. The results of such projects are visible all the time. For example, ads that unique to a user’s interest show up in the user’s Facebook news feed. The IoT is set to create much more data than is created by human beings. This data will be used to enable organizations to increase efficiency and effectiveness, stimulate revenues, innovate, and transform the way they do business. Demand for tools that can visualize this data will increase in 2014 as organizations seek to improve evidence-based decision making. © 2013 Frost & Sullivan Page 2
    • Mobile Communication Predictions for 2014: A Frost & Sullivan Perspective Market Insight The role that MNOs can play relates back to their networks and subscriber data, which can be aggregated, anonymised, and overlaid with relevant datasets for new applications. Eventually, MNOs are expected to successfully be established as trusted custodians of data. Beyond 4G—SDN Starts To Gain Mindshare The demand for data, particularly from mobile devices, is increasingly burdening existing telecommunication networks. New applications, services, and new visions such as IoT will likely exacerbate this situation. Therefore, telecommunication networks cannot merely upgrade to new and high-speed variants with greater capacity. While in 2014 there will be continued heavy investments in 4G infrastructure to meet the insatiable demand for data, telecommunication networks need a new approach designed around capacity, energy efficiency, and cost optimisation. The network of the future has to be high-speed, scalable, secure, and reliable. Software and data can make networks intelligent, flexible, and adaptable. They also enable automation of networks, such as changing firewall rules and device configuration, new forms of virtualisation, reduced use of hardware, and virtual components when needed. Software can also boost the distribution of network resources and reduce maintenance costs and energy consumption. Consequently, the number of initiatives in software-centric networking—in particular, software-defined networks (SDN)—is expected to surge in 2014. Market leaders will emerge based on their willingness to embrace and adopt innovations in their network capabilities. Through a highly superior network quality, MNOs will be able to avoid price wars, retain customers, and eventually create broad customer satisfaction. From Mobile Payments To Engagement Enabler There has been a lot of anticipation surrounding near field communications (NFC) payments in Europe, but despite a number of trials and commercial launches, the technology has failed to gain true mass-market momentum. One of the key questions market participants raised is whether the growth of cloud-based mPayment services will downplay the role of NFC-based alternatives. Frost & Sullivan research suggests cloud-based mPayments will offer immediate opportunities for payment service providers and mobile operators that play an active role in the value chain. Research also indicates that in 2014 there will be many commercial NFCbased mPayment service launches, with expectations that the technology could finally gain a foothold in the new year. From the perspectives of MNOs, mobile financial services in Europe are more difficult to define and, thus, more difficult to target. Unlike the obvious demand gap in, for example, the segment of society without bank accounts, banking and financial services in Europe tend to function well and efficiently. MNOs’ attempts to be relevant in mobile financial services have become efforts of an engagement enabler. © 2013 Frost & Sullivan Page 3
    • Mobile Communication Predictions for 2014: A Frost & Sullivan Perspective Market Insight MNOs are optimizing strategies in order to generate revenue from transactions based on Web platforms. The creation of Weve in the UK—a joint venture between EE, O2 UK and Vodafone UK—is a good example of how operators look to drive new opportunities based on their understanding of the customer, enabling brands to engage more effectively with users. While mobile transactions are part of the story, advertising and loyalty will increasingly become areas of focus. Chinese Smartphone Manufacturers Start To Make A Real Dent In Western Markets In the past year, smartphone shipments in China increased by 103%. This explosive domestic growth propelled some firms towards the top of the global market share charts. Globally, Lenovo, ZTE, and Huawei are sell more smartphones than Blackberry and Nokia, and 2014 will be the year these companies really start gaining traction in Western markets. Lenovo is most likely to break into Western markets in the short term. The company has a strong innovation culture, and this innovation is burgeoning in the smartphone business with its IdeaPhone range. The wildcard, and arguably the most interesting company, is Xiaomi. Its unique business model is worth watching as the smartphone market matures globally. With the average selling price of hardware falling and margins shrinking, many companies will look to adopt Xiaomi’s model of selling services to generate revenues. With ZTE and Huawei already a presence in Western markets and Lenovo, Coolpad, and Xiaomi increasing their presence, smartphone margins will be squeezed for everyone. Lower costs and manufacturing know-how will enable Chinese companies to survive in such competitive conditions; in order to thrive, they must focus on innovation, marketing, and services. Wearable Devices Gain Wider Acceptance, But Miss The Mainstream Despite a flurry of product launches, wearable devices have failed to gain mass-market acceptance. But 2014 could be the year of change. First, smartphone and tablet users are demonstrating preferences for even more connected lifestyles, demanding everything from weather forecasts and traffic reports to messages at their fingertips. A wearable device, whether strapped to a wrist or part of a pair of glasses, offers a viable alternative to traditional handheld products. Second, functionality of wearable devices will increase. Previously confined to delivering only pre-programmed information, the leaps in technology now allow devices to display anything from Twitter updates to body temperature readings. New functions have emerged, and with them, new markets. Wearables are shifting from having a tech-enthusiast image to having an everyday consumer image that can be integrated with contemporary style or fit within a range of products designed for a particular purpose. © 2013 Frost & Sullivan Page 4
    • Mobile Communication Predictions for 2014: A Frost & Sullivan Perspective Market Insight European MNOs looking for a revival in consumer fortunes will seek ways in which they can tap into this consumer-driven wearables trend. Market development is expected to revolve around connected home, connected campus, or connected gym environments, where MNOs play the following vital roles: network provider, device channel, digital service provider, and trusted custodian of customer data. About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today’s market participants. For more than 50 years, we have been developing growth strategies for the Global 1000, emerging businesses, the public sector and the investment community. Is your organisation prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies? Contact Us: CONTACT US Start the discussion +44 (0) 20 7343 8383 • enquiries@frost.com • www.frost.com