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Mobile and wireless devices are revolutionizing the way we think, work, play and live in the same way the Internet did almost two decades ago,” said Sara Diamond, Chair of the MEIC and President of ...

Mobile and wireless devices are revolutionizing the way we think, work, play and live in the same way the Internet did almost two decades ago,” said Sara Diamond, Chair of the MEIC and President of the Ontario College of Art & Design (OCAD). “Unfortunately, our research shows that we’re falling behind other jurisdictions in terms of our ability to play a leading role in driving this mobile revolution.

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Mobile Experience Innovation Centre Mobile Experience Innovation Centre Document Transcript

  • Innovation and Insight: Mapping Ontario’s Mobile Industry Mobile Experience Innovation Centre, April 2009
  • Innovation and Insight: Mapping Ontario’s Mobile Industry Mobile Experience Innovation Centre April 2009
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 2 Innovation and Insight: Mapping Ontario’s Mobile Industry April 2009 All content developed and coordinated by the Mobile Experience Innovation Centre via the MEIC Steering Committee, Working Groups and Additional Partners. Phase One of the Mobile Experience Innovation Centre was led by the Ontario College of Art & Design, and managed by Michele Perras, MEIC Project Manager. The MEIC is grateful for the funding provided by the Ontario Media Development Corporation through the Entertainment and Creative Clusters Partnership Fund. Phase One was also supported by the following Secondary & Additional Partners: 33 Magnetic Ltd Aesthetec Achilles Media Ltd Bitcasters CFC Media Lab Canoe.ca/Quebecor Decode Entertainment Inc The Delvinia Group Design Exchange Ecentricarts, Inc George Brown College Gesturetek, Inc IBM Interactive Ontario marblemedia MEF Canada Microsoft Canada MobileMonday Motorola Mypetbrainstorm RBC Canada Ryerson University Silverback Wireless Sweet Caesar Telus Mobility Triptych Media TVO UOIT WirelessNorth.ca Yahoo! Canada The content of this report is licensed under Creative Commons Attribution-No Derivatives License. For more information on this license, please see http://creativecommons.org/ licenses/by-nd/3.0/ For more information on the MEIC, please go to http://meic.ocad.ca For more information on the Entertainment and Creative Clusters Partnerships Fund, please go to http://www.omdc.on.ca/Page3231.aspx The Mobile Experience Innovation Centre is a public-private consortium engaging leaders in mobile research, design and innovation. Funded by the Ontario Media Development Corporation and the Entertainment and Creative Clusters Partnership Fund, the MEIC includes 5 academic institutions and over 30 organizations from across the mobile industry, and is led by the Ontario College of Art & Design (OCAD). The MEIC has launched Phase 2, as of March 2009, to facilitate research and prototyping between industry and academic partners. Through 3-month initiatives in mobile design, user experience, foresight, and business model development, etc, the MEIC develops partnerships to link students, faculty, non-profits, small and medium sized enterprise, and corporations. To learn how to become involved, please contact Michele Perras, Project Manager, at mperras@ocad.ca.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 3 Table of Contents 5 Innovation and Insight: Mapping Ontario’s Mobile Industry – Recommendations 13 An Analysis of Global Trends, Impacts and Opportunities in the Mobile Industry, applied to the Province of Ontario – Ray Newal, with the Mobile Experience Innovation Centre Working Groups 37 Portrait of the Ontario Landscape: A Survey – Led by Michele Perras, MEIC Project Manager, with the MEIC Steering Committee, Working Groups and Additional Partners
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 5 Innovation and Insight: Mapping Ontario’s Mobile Industry – Recommendations
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 7 Overview In many ways, the current state of mobile and wireless industries resembles that of the early years of any new, disruptive media. Just as the internet of 1990, although difficult to see at the time, subsequently transformed human behavior, communications and business in a ubiquitous manner, mobile and wireless technologies are leading the next revolution. We are rapidly moving towards an era where everyone will be a mobile entity moving through a robust, interconnected landscape. Our window of opportunity is to decide what we would like that landscape to be. Mobile capacity is a key factor for growth across industries, being the technological, organizational and human thread that will link all activities in coming years. The current Canadian context is lacking in terms of preparedness to embrace the next generation of networked enterprise, educational and cultural activity – data rates, though becoming more accessible, are still quite high compared to global standards, mobile penetration is lagging, and access to capital, distribution[1] and markets are the largest inhibitors to local entrepreneurial growth in this sector. However, solutions are within reach. Specifically, Ontario has the potential to become a global mobile and wireless leader, and has a long tradition – and continued willingness – to collaborate on initiatives aimed at leveraging current capabilities and future potential. We believe that future potential must be realized by developing convergence strategies for Ontario’s entrepreneurial and educational activities. Around the world, Convergence Centres of high cultural-economic activity, innovation and commercialization of products and services operate according to the mantra of Build Local, Aim Global. Building capacity to the convergence advantage in areas such as the Southern Ontario Triangle (including Waterloo, the Golden Horseshoe and Ottawa) will leverage our existing strengths and facilitate opportunities for future growth. The MEIC has identified the following factors and recommendations to do this: Led by the MEIC and drawing upon its pool of industry and academic resources, a strategy has been developed to leverage and enhance Ontario’s Virtual, Physical and Human Infrastructures, targeted at the mobile and wireless industries, through networks, consortia, partnerships and investment into the entrepreneurial community. This strategy will continue to leverage Ontario’s strong tradition and continued willingness for cross-sector, cross-platform collaboration, and facilitate continued support of Ontario’s Convergence Advantage. This aims to strengthen local business and consumer markets and attract venture investment while creating a branded platform and increased channels to global marketplaces. As advocates and partners, the MEIC will work towards developing government procurement strategies in capital investment, increased tax credit initiatives targeted at mobile content, services and application developers. The development and implementation of agile and lightweight architectures must be framed and collaboratively built for the 3 largest inhibitors of local growth: Lack of Access to Capital, Markets and Distribution. The MEIC will continue its support and facilitation of Agile & Rapid Prototyping, Strategic Foresight, Adaptive Innovation and Applied Research initiatives in mobile and wireless technologies, via an industry-academic centre or virtual consortium. [1] While application marketplaces provided by Apple, Nokia and Blackberry are providing some opportunities for developers of content, they are currently not the drivers of economic and innovative growth.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 8 Key Phrases Virtual, Physical and Human Infrastructure; Tax Incentives for Mobile; Government Procurement and Capital Investment Strategies; Innovation and Convergence The following research report and survey conducted by the Mobile Experience Innovation Centre in 2008-2009 has resulted in a series of strategic recommendations for both the MEIC in its future iterations as well as towards industry, government, academic and other leaders in Ontario. By focusing on four main areas, the MEIC long-term strategy has developed a flexible, wholistic perspective that encourages collaborative innovation, educational engagement in the digital sector and economic growth at all stages of the mobile value chain. The four areas for the long term MEIC strategy are outlined and further developed below:
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 9
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 10
  • Innovation andand Insight: Mapping Ontario’s Mobile Industry Innovation Insight: Mapping Ontario’s Mobile Industry 13 An Analysis of Global Trends, Impacts and Opportunities in the Mobile Industry, applied to the Province of Ontario Ray Newal, with the Mobile Experience Innovation Centre Working Groups March 2009
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 14 Methodology The following document was developed collaboratively through the Mobile Experience Innovation Centre Working Groups, Independent Research Consultant Ray Newal and Michele Perras, MEIC Project Manager. Over the course of 6 months, two Working Groups, focusing on Mobile Behaviour and Emerging Business Models, led by Gabe Sawhney of 33 Magnetic, Ltd and Avi Pollock of RBC Applied Innovation, respectively, worked with the larger MEIC group as well as Ray Newal in developing this report’s content. Continual discussions and revisions ensured the document was truly a collaborative venture.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 15 Introduction Through recent innovations in mobile and country, city, state, or province that invests web technology, the world finds itself at the heavily in creating a work-force with the fulcrum of a major shift in the way people right combination of skills and creativity, consume information. These innovations will become a proverbial battle-field will result in the elimination of borders be for emerging mobile platforms. These they political, geographic, economic, social, battle-fields will attract large amounts of language-based, or otherwise. Information investment from multi-nationals and other will be readily accessible everywhere, by players from within the funding eco-system, anyone, and will be presented in ways and will thrive on the spending power of a that are socially, culturally, and locally highly-skilled and sought-after work-force. familiar. Already, mobile devices are being used to remotely monitor patients’ The purpose of this report is to analyze the health. And closer to home, cell phone shift that is occurring within the mobile tower activity is being used to determine industry on a global scale, making light of traffic patterns along busy highways. impacts as they relate to consumers and businesses within Ontario. Our analysis Within the shift that is taking place, lays draws from a landscape of recent research, significant opportunity for innovation industry blogs, news articles, and working and ultimately, wealth creation. A few group documentation that has been companies, namely RIM, Microsoft, Google, prepared by members of the MEIC initiative. and Apple among others, will supply the The report will look at the changing mobile platforms for which this shift will occur, but landscape with specific focus on the areas they will not be the only entities to prosper. of consumer behaviour, business dynamics, Carriers, old and new, are investing millions funding activity, and education. Through of dollars into next generation networks that this analysis of the changing landscape, will enable rich multimedia content to flow and through our perspective of the way in at broadband speeds regardless of location. which business eco-systems are evolving to Throughout the world, media companies, accommodate the shift, it is our hope that health care services, utility companies, this report will help to inform the way in transit services, game publishers and a vast which the Ontario government engages with array of others, are already beginning to rely all inhabitants of the broader mobile eco- on a fertile green-field of talent to develop a system. In the interest of disclosure, the long-tail of applications through which this author of this report is an Ontario-based shift will occur. While some applications will entrepreneur who is currently in the midst receive more usage than others, ultimately of establishing a business centred on mobile it is the breadth, quality, and usability of content distribution and monetization. His available applications that will allow the background includes close to fourteen years winning platform to prevail. The platforms of business development, marketing, and which emerge will see unprecedented levels sales experience within technology and new of usage. These emerging industry dynamics media companies that include Microsoft, have created a gold rush of sorts, as each new Yahoo!, and DoubleClick among others. mobile platform competes for compelling content and for talented content creators. Today, due to the relative newness of the shift that is taking place, a scarcity of talent exists to create applications for these new and emerging platforms and devices. Therein lays an opportunity for the creation of geographic centres of innovation. The
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 16 Mobile Usage Mobile usage is in the midst of a sea change developers, entrepreneurs, artists, educators transformation. For years, mobile offerings and ordinary Canadians to create, share in North America have lagged those of other and distribute their own content using developed and, in some cases, developing mobile devices or across mobile networks. countries as well. North Americans were late to implement 3G networks, slower to As a result of all these forces, the pace of adopt SMS, slower to introduce smartphones innovation in the industry, particularly and other advanced features. Historically, in Canada, is accelerating rapidly. With a particularly within North America, incumbent broad base of creative talent, educational mobile network operators (MNOs) were and industry resources, one could argue able to establish a powerfully dominant that Ontario is already transforming itself role within the mobile value chain. The from laggard to leader in almost every accessibility of mobile services and pace segment of the mobile industry value chain. of mobile innovation was entirely gated by the service, price levels, and offerings The transformation which is under way made available by the MNOs. For many in the mobile industry will expand the years, North American mobile subscribers ubiquity of smart, networked devices to the in particular, looked on as Europeans used market. Indeed, most of the first world has cell phones to purchase goods and services; been deeply penetrated with ubiquitous citizens of Asian countries experienced new access to mobile for a while now. By the ways of connecting and sharing content first quarter of 2006, over thirty countries with one another; and in the third world, had already exceeded 100% per capita cell consumers who couldn’t afford land-lines phone usage (meaning in those countries, and automobiles were all of a sudden gaining some users had more than one phone) . access to cheap mobile voice and data services. Canada, which among developed countries sees one of the lowest mobile penetration In recent years, the forces of technological rates, at 61.6%, will see growth happen at a change have suddenly begun to disrupt the quicker pace thanks to the entrance of new historical patterns of the mobile industry. competitors in the carrier arena. Developing Canada and North America are catching up countries such as India and China still have a to the rest of the world. We are beginning ways to go before they see similar per capita to see the market power of incumbent penetration, but it is these countries among MNOs erode slightly, as players at almost all other developing nations that will see the stages of the value chain are finding new highest number of new aggregate subscribers ways to assert themselves. Thanks to “killer added every month. As a testament to this, devices”, vendors like RIM and Apple are according to the Telecom Regulatory Authority gaining more clout with consumers. Thanks of India, in January of 2009 India saw a to new distribution channels and device record of 15 million new mobile activations. capabilities, publishers and mobile content creators are finding ways to deliver content The transformation we are currently directly to mobile users without necessarily experiencing will also have a dramatic negotiating deals with network operators impact on the way residents of urban, for access to “decks” or walled gardens. rural, and even war-torn areas use and rely Consumers too, are becoming savvier and on their mobile devices thanks to cheaper more aware of “what they are missing”. In and more accessible data services, feature June of 2008 10’s of thousands of Canadians laden devices, and more informative, signed a petition eventually influencing compelling, and accessible mobile content Rogers to change their pricing plans for the and applications. Features such as location iPhone to be competitive with global rates . awareness will create dependency on the Ever-improving mobile technology has made mobile phone for orientation in unfamiliar it increasingly commonplace for independent places, be they across town, or on the other
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 17 side of the planet. Mobile technology is also transforming journalism. The front page photos of the 2005 London bombings were taken with mobile phones. In January 2009, when a US airliner crash landed in the Hudson River, the first photos and media reports were delivered by Twitter, an SMS-based mobile social networking platform. In San Francisco, a group called Mobile Millennium (a partnership between Nokia, Navteq, and UC Berkley) have found a way to fuse GSM data from cell phones with data from existing traffic sensors to build a functional traffic monitoring system. Residents of the Bay Area can participate by downloading an application free of charge. Contrast this application of real-time, location specific data with those originating in areas such as Uganda, or East Timor, or even London, UK, where SMS is used to alert residents of hostility breakouts and locations, along with instructions to those who happen to be in the vicinity of attacks that are taking place. As data speeds increase to broadband levels and device processing and interface capabilities allow devices to display rich data in graphical and tactile ways, mobile users will begin to store all of their ‘life’ content within external network repositories, or in current lexicon: ‘the cloud’. Ubiquitous access to personal data and content stored in ‘the cloud’ will mean subscribers, both consumer and corporate, are never away from their desk, filing cabinet, television, or music collection. Medical, financial, and educational records will never get lost. And above all, thanks to the changing dichotomy of influential players within the mobile industry, and the axis of control moving from incumbent carriers to wireless platform, media publisher to social network, proprietary operating-systems to open-source operating-systems, and proprietary software publishers to developer communities; the price of usage will come down. Ubiquitous access to ‘life’ information and content will no longer be restricted. Canada will not be insulated from this transformation.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 18 Mobile industry With established Global Examples Value Chain presence in Ontario Mobile users / Subscribers >7B mobile phone users >1B mobile phone users Mobile content 100s of Freelance Independent developers, Developers, Small Content Music, Film and Gaming Studios with 1-5 employees, industries, consumer Cross-Platform Interactive and enterprise software Agencies, Digital Games, industries, Public sector: National Media Outlets Government, Education, (Canwest Media, CBC, healthcare and 911 services. Canoe.ca etc.) Financial Financial services. Media: Services (all of Canada’s News media, social media, largest banks and card user-generated media. associations), Health Care, Advertising and Marketing. Distribution and Content RIM AppStore, Viigo, Apple AppStore & iTunes Creation Tools Glassbox, Mythumb, etc. store, Microsoft Skymart, Yahoo Gears, Google Android Market, Nokia Marketplace Mobile Platforms & RIM Blackberry platform, Windows Mobile, Nokia Operating Systems Windows Mobile S60, Apple iPhone, PalmOS, Google Android Mobile Device RIM, Motorola Nokia, Apple, Palm, Manufacturers Samsung, LG, Ericsson, Motorola, NTTDocomo, HTC, Asus Mobile Network Operators Rogers, Bell, Telus, (MNOs) Globalive, MTS Equipment suppliers Nortel, RIM, AMD Nokia, Ericsson, Motorola, Qualcomm Academic Institutions OCAD, George Brown College, University of Ontario (Active in Mobile Research Institute of Technology, and/or skills training) Ryerson University, CFC Media Lab, University of Toronto, University of Waterloo, Carleton University, Conestoga College, etc. Source: WirelessNorth.ca, 2009
  • Innovation and Insight: Mapping Ontario’s Mobile Industry Innovation and Insight: Mapping Ontario’s Mobile Industry 19 Mobile Data Evolution Until very recently, Canadian consumers comparison to that of businesses. Despite ranked among the lowest in the world in the high cost of data, businesses seem to terms of data usage. Consumers for the still be able to justify the expense. In a 2006 most part ignored the mobile web. Younger survey of 300 SME’s (Small and Medium- or more technologically adept demographics Sized Enterprises), IDC Canada (on behalf had in recent years begun to embrace SMS of International Technology Association of as a substitute communications tool, but Canada) found that 79% of respondents for the most part Canadian consumers were reported that improving productivity and restricted to Voice services. Employees of efficiency within the organization is a leading businesses that could justify the purchase of business priority. Perhaps it is thanks to expensive data plans became the primary, these increases in productivity through and for all intents and purposes, the only mobile devices, and the overall accessibility users of data services in this country. of employees beyond the traditional 9 to 5 work day that businesses are able to As recently as April 2007, the cheapest justify the high cost of data transfer. Or it Canadian mobile data plan was more than 6 could be because business owners have the times more expensive than T-Mobile’s service ability to write-off mobile fees as business plan in the US, 5 times more expensive than expenses. Regardless, while mobile services data plans offered by Terracom in Rwanda, may drive real value to business owners, and 9 times more expensive than the data higher Canadian mobile fees have been plan offered by Vodafone in New Zealand. driving a higher cost of doing business in Canada across all segments of the economy Carriers have, until very recently, tightly that rely on BlackBerries and other mobile controlled the Canadian mobile industry. services. Thanks to a lack of competition, Consumers in Canada have been trained to until the recent shift of control within make mobile subscription decisions based the mobile eco-system, Canadian carriers on plans and services, particularly those have felt limited pressure to reduce rates. bundled with land-line and broadband services, not mobile hardware. According Part of this expected shift is due to the to a recent (May, 2007) document submitted approach the government employed to by the British Columbia Public Interest release AWS (Advanced Wireless Services) Advocacy Centre to the Director General of spectrum. This approach has made it Telecommunications at Industry Canada, possible for new entrants to compete with the average cost of residential land-line the incumbent carriers, by reserving space in service offered by a monopoly provider in the spectrum as well as guaranteed roaming BC is $23 to $29 a month, compared to the access to incumbent cell towers for a period average monthly cost of mobile service of 5 to 10 years (the life of the license). The which is $79. Canada sees a particularly auction, held in mid-2008, is expected to be high penetration of land-line usage, with the last major Canadian spectrum auction over 92% of the population having access for a number of years. Specifically, this to land-line services offered by regulated auction dealt with the licensing of chunks of monopoly providers. Indeed, perhaps due frequency between the ranges of 1670 MHz to a combination of price, accessibility, and and 2155 MHz, the largest block of spectrum perhaps even influences such as the aging ever released in Canadian history. This part population, a very high percentage of the of the spectrum range provides an attractive population end up relying on their land- balance of coverage and bandwidth line phone as their ‘primary’ telephone. capabilities. In general, the lower the frequency within the radio spectrum, the Add to these factors the cost of data transfer, better the coverage of the signal ranges, and it becomes quite apparent why consumer but the lower the bandwidth capabilities. demand for data-rich devices has paled in
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 20 Innovation and Insight: Mapping Ontario’s Mobile Industry Though Canada conducted its auction of AWS Though Canada conducted its auction of AWS spectrum a full two years after the US, it should be noted that the average Price/MHz for each potential customer came in at $1.41 after 331 rounds of bidding. This compares to an average price of $0.54 in the US. Canada had been expected by analysts to generate a mere $0.40/MHz per potential customer. The new entrants which emerged through the spectrum auction include Globalive Wireless (which paid CA$442m for a national licence), Data & Audio-Visual Enterprises (which won licences for Ontario, Vancouver, Edmonton, Calgary and Victoria at a cost of CA$243m), and Shaw Communications (which paid CA$190m for access to spectrum in British Colombia, Alberta, Winnipeg, Saskatchewan and northern Ontario) among others. Though most of these ‘new’ players already offer services of some kind to consumers, they are expected to deploy a plethora of new ‘bundled’ services which will help to boost Canada’s mobile penetration rate. It is widely expected that as Canada’s mobile penetration rate surpasses the 80% mark, a scarcity of new subscribers will force increased levels of competition among all carriers, which will almost certainly put downward pressure on mobile voice and data plans. Source: Wired Magazine, 16-10-2008
  • Innovation and Insight: Mapping Ontario’s Mobile Industry Innovation and Insight: Mapping Ontario’s Mobile Industry 21
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 22 Innovation and Insight: Mapping Ontario’s Mobile Industry Canadian AWS Spectrum Auction Winners - 2008 Bidder and Legal Bidding Total of Winning Bids Population Spectrum Acquired/Region Name Coverage Rogers - Rogers Communications $ 999.4 M 30M National - 20 MHz Telus - Telus Mobility $ 879.9 M 30M National - 10 to 20MHz Bell / BCE - Bell Mobility Inc. $ 740.9 M 29M National - 10 to 20MHz except no licenses Manitoba, Saskatchewan. Quebecor/Videotron - 9193- $ 554.5 M 29M Regional - Quebec 40Mhz, 10Mhz 2962 Québec Inc Toronto and southern, Eastern Ontario Globalive Wireless - YAK Com- $ 442.1 M 25M National – 10 MHz each province/ter- munications ritory except Quebec DAVE (Data & Audio-Visual) $ 242.1 M 17.5M National/Urban – 10 MHz in Southern/Eastern Ontario, Calgary, Victoria, Vancouver, Edmonton Shaw 1380057 Alberta Ltd. $ 189.5 M 12M Regional – Western Provinces 20MHz from BC to Manitoba except 10MHz in Saskatchewan SaskTel $ 65.7 M 3M Regional – 30 MHz Saskatchewan Manitoba Telecom - 6934242 $ 40.8 M 3.5M Regional – 20Mhz Manitoba Canada Ltd. Bragg a.k.a. Eastlink Bragg Com- $ 25.6 M TBA Regional – Atlantic Provinces 30MHz munications across NFL, NB, NS, PEI and 10 to 20MHz some areas of northern Alberta and Ontario Celluworld $ 0.5 M TBA 10 MHz Chatham, ON Rich Telecom $ 0.4 M TBA 10 MHz Huntsville, ON and Dawson Creek, YT BMV Holdings $ 52.4 M 18M 10 MHz Urban Southern Ontario, Quebec Source: WirelessNorth.ca 2008 The leading business metric for MNOs is the other countries in the world. In fact, when Average Revenue per User (ARPU). ARPU data related revenues get spread out over is a closely monitored benchmark which all mobile subscribers, Canadian carriers indicates how much revenue an operator rank as one of the lowest earners of data is making from every user, every month. related ARPU of all developed countries. In Canada, ARPU fluctuations between our Perhaps this is due to the historically three major carriers can mean significant narrow market for data services among changes in revenue. ARPU is sometimes business subscribers. Today, thanks to the segmented by analysts into Voice and proliferation of devices and applications Data related ARPU. In 2006, while in most that make data services compelling to developed countries, data-related ARPU was consumers, the carriers see an opportunity on the decline, Canada led the rest of the to expand their data services portfolio to a world in net data-related ARPU increases. much wider audience. Data transfer prices And it wasn’t because our typical mobile have dropped significantly, as carriers opt for subscribers were consuming more data than consumer-targeted multi-year data plans as a method to boost data-related ARPU.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry Innovation and Insight: Mapping Ontario’s Mobile Industry 23
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 23a Impacts of the With the advent of the iPhone in 2007, Apple introduced a device that would for the first iPhone on Data time make rich data services compelling for consumers. Through being the first device Usage to incorporate features such as location awareness, a large touch screen, a powerful processor, an easy to access third party application platform, and a browser that allows full web pages to be accessed and Aside from the cost of data being an inhibitor browsed in a quick and intuitive manner, to mobile data usage among Canadian the iPhone has set the standard by which all consumers, there was also a lack of any smartphone devices are being compared. This apparent or practical consumer need for data will likely continue for the foreseeable future. services until the iPhone and high speed The result of all this has been a significant 3G data transfer came along. Historically, impact on the mobile eco-system in almost consumer’s found mobile devices to be all markets that the iPhone is offered. unintuitive when it came to doing anything other than checking email, sending text Though Canadians weren’t able to purchase SMS messages, or in some cases chatting the first generation of iPhones through via mobile messenger/SMS applications. legitimate channels, thousands of unlocked Browsing the mobile web meant navigating phones made there way into the market through multiple screens and menus; anyway, priced at well over $500. To the entering or searching for web pages that chagrin of most Canadians, the iPhone is usually didn’t exist in MOBI or WAP form; only designed to work on the GSM mobile and then waiting for text laden, graphically platform. This meant that unless users of the poor, pseudo-web pages to download at a first generation of unlocked iPhones were snails pace. Once the page was loaded, these willing to pay the hefty data rates charged devices lacked an intuitive way to interact by Rogers in 2007, they would have been with the content. Restricted to low-speed relegated to using their devices via Wi-Fi, GPRS or 2.5G networks, even devices that or to using them as glorified iPods. When could browse conventional web pages, or Apple announced in spring of 2008 that the multi-media content were never practical. 3G iPhone was coming to Canada through Rogers, most consumers expected Apple to For the most part, consumers restricted their have asserted its newfound and growing mobile web usage to applications or sites that influence over carriers, to Rogers. The were situated ‘on-deck’. On-deck meant 3G iPhone is the second generation of the the page or content was situated within one iPhone which supports the third generation or two sub-menus, making it much easier of GSM platforms and claims speeds that are to access. Unfortunately it didn’t make the at least twice as fast as the EDGE capable content easier to interact with. It also didn’t first generation iPhones. If form factor was ensure a better experience for the consumer. the cause of the first generation iPhone’s In most cases, on-deck deals were driven by success, then functionality and speed are the fees paid by portals, or applications developers drivers of the second generation’s success. to the carriers or device manufacturers. As In many countries, Apple had become consumers became increasingly accustomed notorious for holding out on deals with to the limitless world of multimedia content, carriers unless packages were offered that and applications which were available via would let consumers take advantage of the broadband connections on the PC Web, they full potential of the device without worrying couldn’t help but feel restricted on the mobile about data charges. In a few of these, Apple web. Between the lack of content, services, had managed to do the impossible. They and applications available to consumers pushed carriers to offer unlimited data plans via the mobile web, the impracticality of at a reasonable monthly price. This wasn’t the viewing and interacting with content on case in Canada. A couple of weeks before the mobile devices, and the slow bandwidth July 11th launch of the 3G iPhone in Canada, speeds available via 2 and 2.5G wireless Rogers announced it’s pricing, resulting platforms, consumers understandably saw in an uproar of disenchanted consumers. relatively little need to demand better data packages and services from providers.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 23b Perhaps due to the onslaught of publicity via And yet the devices themselves are only sites like ‘ruinediphone.com’, where 50,000 a part of the shift that is taking place. consumers protested the pricing of the original iPhone data plans, shortly before launch, Rogers introduced a 6 GB data option for $30 a month. As consumers for the first time started to show an interest in purchasing monthly data plans for a reasonable price, Bell and Telus decided at about the same time to begin charging consumers without a plan, $0.15 per received text message. Having awoken to the necessity of a cost effective mobile data plan, Canadians now demanded better data rates. And carriers have woken up to this opportunity, responding receptively with a range of moderately priced multi-year data plans that have become the focus of intense competition. Though consumers have been somewhat successful at putting pressure on the carriers to reduce data rates, there is still a disparity in the way consumers use mobile data, due largely to the device selection available on each platform. The 3G iPhone is still one of the only devices on the Rogers Network to make the usage of rich data and applications practical to consumers. The BlackBerry Storm, Samsung Instinct, and HTC Touch are new entrants to the 3G smart devices category and share many of the iPhone’s features and form factor. These handsets, offered by Bell and Telus, and have been the center of an intense marketing battle between Canada’s top three carriers. Devices such as BlackBerry’s Storm, and others developed to run on Google’s Android operating system will provide functionality that is similar to the iPhone to consumers and business people alike. Consumers have voted with their usage, that they are willing to embrace mobile features such as location awareness, full-page web browsing, and third party application stores, if the device makes usage: easy, intuitive, and therefore practical. Within 6 months of the launch of the first generation iPhone, its proprietary browser accounted for 0.09% of total browser market share, compared to Window’s CE which had only 0.06% market share despite having been on every Windows Mobile device shipped. In February of 2008, Google announced that the iPhone was accounting for 50 times more searches than any other mobile device. Within 30 days of Apple launching the App Store, over 60 million applications had been downloaded.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 24 3G and the Future at this level are LTE (Long Term Evolution), which will begin to see commercial roll of Wireless Data outs by carriers in 2011 if not sooner, and WiMAX, an open, worldwide standard that covers both fixed and mobile deployments. Carriers see WiMAX as a threat because it can be offered today by network providers that focus specifically on data. WiMAX providers offer both high-bandwidth and broad If it weren’t for 3G network capabilities, smart coverage, which mobile carriers can’t provide devices would see their most compelling cost effectively, until they’ve deployed 4G features restricted to WiFi enabled hotspots. technology. Leveraging this competitive The migration path from 2G (offered in advantage, providers are already making Canada since the mid 1990’s) to 3G has not inroads by offering fixed WiMAX services to been a smooth one, perhaps owing in part many rural regions of Canada that do not have to a plurality of network systems (CDMA access to broadband telecom, or cable wire- and GSM). While the Rogers GSM network line services. The long term threat of WiMAX to needed to employ W-CDMA technology to mobile carriers is enhanced by mobile WiMAX. upgrade its 2G systems to 3G; Bell and Telus, seeking to avoid the cost of migrating to a GSM system, opted to deploy CDMA2000- EVDO in order to offer competitive high speed data services. With current 3G deployments, all three carriers should be able to support data transfer speeds of up to 2 Mbps, but in most cases speeds of 160 Kbps to 380 Kbps have become the norm. Contrasted with the speed of previous 2.5G offerings (CDMA20001x, and Edge) which offered download speeds in the range of 80 to 160 Kbps, this is still a substantial increase. Despite the availability of 3G services in many metropolitan areas throughout Canada, it is widely expected that the impact to mobile data usage will pale in comparison to the Source: Techware Labs, LLC , 2002-2008 changes which come about through the next evolution of Canada’s mobile network A mobile WiMAX standard was ratified in infrastructure. Already, all three carriers are 2005 which allowed providers to build getting ready to deploy the next generation networks which allow for signal transfer of network improvements, enabling what between base stations, effectively allowing some are referring to as 3.5G. HSPA is a subscribers to ‘roam’. Even though WiMAX protocol that improves data transmission is data focused, mobile broadband services speeds for W-CDMA (GSM) networks and could easily layer a VOIP (Voice Over Internet can support download speeds of between Protocol) application for marginal network 4-14 Mbps. While HSPA would be a pretty cost, thereby giving them the ability costly upgrade for Telus and Bell who to push Voice and Data services below currently employ CDMA networks, CDMA the breakeven point of mobile carriers. carriers are experiencing growing pressure to convert to GSM platforms given the lower Looking forward into the next decade, cost and higher selection of GSM handsets. Canada will also see another important radio spectrum auction take place. The In the not too distant future lies 4G UHF spectrum, a range of 60MHz which deployment. 4G is widely seen as a game is currently dedicated to the broadcast of changer for the wireless industry because it analog television is particularly valuable promises speeds of 50 Mbps while mobile, because of its superior ability to circumvent and up to 1 Gbps while standing still. The two obstacles such as walls, buildings, or key technology standards that will compete mountains. The US held its auction of the
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 25 UHF spectrum in 2008, generating record weren’t taken. Nokia responded to the proceeds of close to $20 billion. Industry MS threat by investing heavily in the Canada is expected to follow the same path Symbian OS. Motorola diversified its use of as the US, allowing UHF licenses to be used proprietary third party operating systems, for mobile, wireless, and broadcast services. Symbian and Microsoft included. And Out of the US auction, two of the major license conversely, some OS manufacturers became winners (Qualcomm, and Aloha Partners) device manufacturers in their own right. are already pursuing the development of systems based on WiMAX technology. With a battle for control raging between the carriers, handset manufacturers, and So what does all this mean? For businesses operating systems, ultimately it was the user seeking to address the mobile market, the experience that suffered. The sheer number of rules have changed. Opportunities exist device/OS/platform/carrier combinations that that didn’t a year ago, and the pace of developers needed to accommodate for any this transformation will quicken. The next specific application could only be described section of this report will examine the role as massively fragmented. Aside from SMS local stakeholders should play in order and related server side technologies, no to establish Ontario as a world-leading silver bullet solutions existed for developers center of excellence for mobile innovation. to use in order to address large scale markets. Until recently, this food chain of carrier, handset manufacturer, and operating system sat in a paralyzing dead-lock. Ultimately, Mobile Business thanks to this fragmented landscape, applications providers were having a Landscape hard time finding sustainable business models, at least in North America. As this fragmentation increased, so did the cost of building and launching viable applications to a mass audience. Only applications providers with deep pockets could afford to develop the near thousands of iterations The Mobile business landscape had of an application needed. And even if an been established around an eco-system applications provider could fund this level and balance of power which until very of development effort, the devices for recently, has made it difficult for start- which these applications were developed ups without deep pockets to penetrate. were not simple to use for the consumer. At the top of the food chain, lay the carriers And then the question of getting on the and handset manufacturers. In the past, handset arose. Applications or content could such power and control existed between either be installed by the factory, before these two players that a veritable force-field the handset was shipped – which became made it extremely difficult for other members known as ‘on-deck’ – or accessed by the user within the eco-system to exist without via the mobile web – conversely known as paying penance. Over time, as the market ‘off-deck’. The sheer difficulty of accessing for smartphones developed, so did a new content from the mobile web through category of carnivore at the top of the food cumbersome device interfaces made off- chain: the operating system. For many years, deck applications and content a non-starter Microsoft, Research in Motion, Palm, Symbian for providers hoping to generate revenues and others have been accumulating greater through advertising, or other models that control as developers of operating systems, depended on critical mass. The volume of and in some cases handsets. As Microsoft’s usage would never scale enough to support a plans to roll out a mobile phone operating viable model via the off-deck approach. The system began to take shape in 1999, many alternative meant paying significant fees per carriers and handset manufacturers looked handset or subscriber to the manufacturers to the history of the Personal Computer or carriers for on-deck integration, and market and Microsoft’s ensuing dominance, even that approach didn’t guarantee usage. and foresaw a similar destiny if precautions
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 26 In recent months, with the advent of the iPhone which was one of the first brands to create and its open marketplace for developers of an iPhone specific game. The A4 Driving third party applications; Google’s roll-out Challenge Application was designed to assist of Android, it’s open source smartphone with the launch of Audi’s new A4 model by operating system which is supported by leveraging the accelerometer features of Motorola, Samsung, LG, and HTC; and the the iPhone to highlight superior handling recent trend among smartphone OS providers abilities of the new car. Networks such as such as Research in Motion, and Symbian AdMob have begun to establish models that to establish their own applications store- aggregate advertising space among multiple fronts for third party developers, similar to applications and mobile platforms in order Apple’s; the eco-system has changed. With to establish critical mass. Local businesses the advent of open-source operating system are also beginning to take advantage of API’s (Application Programming Interfaces), opportunities which allow them to promote and third party App Stores, it is no longer themselves via location-aware applications as difficult for applications providers to get that relate information based on proximity. their software on-deck. It is also apparently less difficult for developers to make money. These are two critical needs that have always been lacking within the mobile eco-system. Mobile business models are beginning to emerge within three distinct categories: Premium Content, Advertising, and Paid Applications. In the Premium Content category, publishers now have a way of accessing consumers directly via app stores if they choose. Open Door Communications is a company that has taken on the task of adapting book formats of travel guides for While Advertising and Premium Content are the iPhone, and charges consumers $1.99 themselves significant business models, per download. But premium content is an interesting new phenomenon is the now becoming a more promising business opportunity presented to developers seeking model even on phones that don’t have to charge for their mobile applications. access to App Stores. As a testament Obscure applications such as ‘Pull My Finger’ which simulate sounds of flatulence, and to this fact, Bell Mobility recently launched Smule’s Ocarina, which allows consumers a service that makes premium NHL content to transform their iPhone into a musical available to subscribers of an NHL Mobile wind-instrument are generating significant Content package. Beginning at $8 a revenues from curious consumers. Now month, subscribers to the service will that RIM has unveiled the BlackBerry App have access to NHL video highlights; audio Store we can expect a similar phenomenon broadcasts of every game; and a feature with a host of new and exciting business called NHL Centre Ice, which streams applications that take advantage of the video of a full game to mobile handsets. features of devices such as the Storm. Though available on a wide selection of Bell phones, subscribers with large screen 3G handsets such as the Samsung Instinct, BlackBerry Storm, and HTC Touch Diamond will inevitably enjoy the best experience. Advertising-based business models have also begun to take shape in a more impactful way due to better interfaces, 3G data speeds, and compelling device features. In some cases advertisers have taken to creating applications as a method to engage Factoring the sheer usability of devices consumers with their brand. An example is such as the iPhone, Blackberry Storm an application recently developed by Audi, and other devices; and the onslaught of
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 27 compelling new device features such as needs of finicky US and international film location awareness, cloud connectivity, and studios. As observed in the first half of 2008, accelerometer telemetry which third party this type of reliance can have an inherently developers can easily incorporate in their negative impact resulting from influences applications via OS-specific APIs, and the such as fluctuations in the Canadian opportunities for exploration are infinite. dollar versus other world currencies. While the eco-system of the new mobile If we are to establish a world-wide center world still includes some of the same of excellence in the mobile industry, our players, the balance of power has changed investments and training infrastructure dramatically. Within North America, need to foster innovation and concepts opportunities have opened for new that are relevant at a global level. This businesses and business models to emerge. means public and private funders need to be prepared to take greater risk on If the Ontario Mobile Industry is to capitalize concepts that apply outside of the Canadian on these recent changes in the mobile stratosphere. For example, while the landscape, the time to act is now. The Canadian market might not have the ability question is, where do we start? If we’re to sustain applications developed to address situated in the midst of a proverbial Gold the entertainment needs of Bollywood fans, Rush, do we focus on mining; do we focus we should still be willing to fund initiatives on building mining tools; or do we invest in like these. Perhaps a specific platform or creating a world-class training system for device capability is uniquely available in miners? It is our opinion that we cannot do markets such as Japan. Does this mean any of these things in isolation, and do them Canadian developers and businesses would well. In order to set the stage for Ontario as a be better-served by ignoring markets such center of excellence in the training of the new as these? Perhaps global market potential mobile industry workforce, we need to also and the ability to gain insights that are establish best of breed businesses here, and ahead of our market development curve we can only do that by establishing a funding need to be factors that are taken into infrastructure that supports, nurtures, and consideration as investments are made. promotes ideas and innovation. To date, our funding infrastructure be it government This means our educators need to include in run, or private, has always embraced ideas their curriculums a focus on platforms that and business models that apply to the exist in Asia and abroad, not just Canadian Canadian market exclusively. This approach platforms. And it means that we should restricts our ability to amortize innovation seek input and involvement from leading based on the size of the Canadian market. mobile industry players outside of Canada to foster trade relationships that make it easy This same phenomenon is endemic to for those companies to tap into local markets adjacent industries such as film and television as a source of innovation. Bridges need to production. Canadian broadcasters are be forged now. This is not to say that local the triggers for funding that gets placed businesses shouldn’t invest in or benefit via government channels into Canadian from our approach. Indeed, by having a content. Due to our consumers’ propensity workforce that is intimately familiar with to consume US content, the mandate of foreign platforms, business models, and most Canadian broadcasters is to focus user behaviours as they apply to the mobile their restricted content acquisition budgets industry; our local businesses will be in a on the purchase of US content. Whatever position to compete much more profitably, is left over (and mandated by the CRTC), is and on a much larger playing field. If we used to make conservative investments in were to choose a theme to rally under, Canadian content. The fact is, we do not it would be: ‘Think Global, Invest Local’. have the market ability to amortize the volume of content, or the quality of content that American broadcasters do. The value of Canadian content on a world stage suffers as a result. Without a global demand for Canadian content, our local film production industry is forced to rely on serving the
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 28 The Funding and are perceived to be much more accessible than government funders. This might follow Eco-System a similar template to the way the government works with banks to administer student loans. A distribution partnership via Ontario banks might solve the problem of accessibility, but that in isolation will not drive innovation within the mobile industry. Government From an entrepreneur’s perspective, the funding initiatives need to broaden their Canadian funding eco-system is comprised mandate to reflect a global perspective, of banks; government; venture capital as opposed to the national or provincial funds; private equity funds; institutions; and mandates that these funds often operate high network individuals (angels) among by. Government funding initiatives need to others. For the purposes of this report, also simplify the scope through which they we will briefly examine several of these apply themselves. In a recent request, made funding groups from the perspective of the in the process of conducting research for entrepreneur, with the purpose of extracting this report, a call to the Canadian-Ontario insights to inform the methods used by Business Centre resulted in an email which the government to foster innovation and included links to just under 20 sources of growth. Deliberately, tax programs such as related information and applications. For an SR&EDs (Scientific Research and Experimental entrepreneur to make sense of the funding Development program) will be excluded approach, they need to stop developing, from this list of funding vehicles. In our and focus their efforts on navigating view, SR&EDs are not funding sources, but through the red tape. Simply put, no young, are essentially incentives for entrepreneurs eager entrepreneur wants to spend their or established businesses who have received time this way. Nor do these young, eager funding, to conduct or extend research and entrepreneurs have the resources through development activities within Canada. While which they can hire government agents important for that aforementioned purpose, to navigate through the red tape on their SR&EDs and similar programs will not behalf. Furthermore, should we really expand the base of entrepreneurial activity be placing investments in people based in a region. If our purpose is to engage new on their ability to navigate bureaucracy? generations of entrepreneurs, who are less versed in navigating the national tax system, The Ontario Centres of Excellence and the MaRS and more skilled in their understanding Discovery District, based in Toronto, created of new mobile platforms, technologies, the Investment Accelerator Fund (IAF) which and applications, then emphasis needs is directed at emerging early stage technology to be shifted to the accessibility of companies. Over 600 companies in the last start-up focused funding initiatives. year applied for funding from the IAF, of which about 14 were successful in attaining Following family and friends, banks often access to funds. The most remarkable aspect provide the first level of funding to any of the IAF is that it relies on a board which entrepreneur seeking to boot-strap their consists of VC’s, angel investors, and members way to a proof of concept. Often, a line of of industry to make funding decisions. In credit, or similar lending vehicle will provide that way, the IAF embodies an effective the quickest and most efficient dilution- partnership between government and proof approach to raising money. Banks for other members of the funding eco-system. the most part do not take risk on seeding early stage businesses that lack operating history, especially those that lack tangible capital assets. The risk falls entirely on the entrepreneur. One solution might be for banks to co-operate with government In regards to the Venture Capital community, funding initiatives, providing distribution VC’s make themselves much easier to find of low/no-interest lines of credit to than governmental institutions, and they entrepreneurs. Banks provide a known, and make the steps to funding much easier to easy to access front-line to entrepreneurs, comprehend. Indeed some VC’s are flexible
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 29 in their approach to funding relationships financing which is provided by a mixture if they believe in a concept or technology. of banks, government, institutions, and The mandate of VC’s causes them to be much themselves. A good example of this kind of more aggressive when it comes to casting partnership is the JumpStart program which their nets. However, as many entrepreneurs is offered by the BlackBerry Partners Fund and can relate, the cost of raising funds from a matches investment made by government VC can be significant. Cost in this context organizations such as the OCE. This could entails equity which VC’s ‘purchase’ by way allow VC’s to place the focus on engaging of the investments they make. Despite the a larger group of investments, thereby chance that the cost of raising money through increasing the funnel size through which their a VC will possibly outweigh the desire of the deal flow occurs. The greater the capacity entrepreneur to establish a business they at the top of the VC’s funnels means more ‘own’, the chances of landing VC funding local successes will come out at the bottom. are tantamount to winning a lottery. As this Perhaps assembled this way, a co-operative report is being written, VC investment activity between banks, government, institutions in Ontario has fallen to record low levels, and VC’s might be better able to compete perhaps due to a hampered ability to exit with funding power-houses that exist in investments given current market conditions. Silicon Valley, Boston, New York and abroad. In 2008, Canadian VC’s saw a total of one IPO take place. The VC model, which is designed to operate based on the velocity of deals that get entered and exited, is suffering. If the act of filtering the number of businesses that receive VC investment results in funding the best start-ups, the local market would logically benefit. The size of the investment is predicated by the size of the funds from Institutions can also provide a valuable which they come. Funds in Canada are contribution to the funding process as proportionate to our market size, as are the demonstrated by the $150 million BlackBerry size of the investments they make. This Partners Fund, which was recently established means that at the onset, investments in through a partnership with Royal Bank of Canadian businesses hoping to compete Canada, and JL Albright & Associates. The with other similar start-ups funded in the mandate of the BlackBerry Partners Fund is to US or elsewhere, is often fractional at best. place investments in early stage businesses How can start-ups build to be globally that are creating applications and services for competitive when the investments they the BlackBerry and other mobile platforms. receive are often barely sufficient to make While the BlackBerry Partners Fund isn’t a dent in the local market? Or perhaps the first to invest in companies that are the answer is not in raising the size of the creating mobile applications and services, investments, but rather broadening the size it is the first to maintain a neutral stance of the funnel, i.e. expanding the number of regarding the platforms for which the fund businesses that receive early stage funding. supports. In contrast, the $100 million iFund, launched by Kleiner Perkins in March 2008 in Many Canadian entrepreneurs meet with partnership with Apple, is focused entirely Canadian VCs as part of the search for on applications and services developed for investment. Therein lays an opportunity for the iPhone platform. Similarly, the Google the VC community to play a role in taking the Android Challenge was initiated as a contest level of innovation within the Ontario mobile by Google in November 2007 to seed interest industry to a higher level. Rather than among the developer community in creating focusing on investing significant capital, and applications for the Android platform. taking significant equity stakes in just a few While these funds were established to add businesses; perhaps an opportunity exists incentives to the developer community for VC’s to cast a wider net, by leveraging the in creating applications that traverse the resources committed by government funding landscape of smartphone operating systems, institutions. Perhaps VC’s should be enabled similar and related activity is happening to act as a more active and easier to engage in the web-based social networking world front-line, distributing pre-seed stage where Facebook, MySpace and others have
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 30 have established themselves as ‘social network OS platforms’. They too are establishing funds to win over the hearts, minds and wallets of the developer community. In order to have greater impact, government funding initiatives should explore closer partnerships with the banks, VC’s, multi- nationals and others that make up the funding dichotomy. While the government may play a role today in encouraging investment from established businesses into the mobile industry, government funding initiatives have massive amounts of unrealized potential. Our suggestion is that government ministries and associations aggregate their investment budgets and apply them with the help of established players such as the banks or VC community. By focusing on the pillars of reach, engagement, and scope, government funding initiatives have an opportunity to significantly impact the pace of innovation within the mobile industry in Ontario. Rather than setting up the tools and infrastructure needed to properly deploy its grants and other forms of financial stimulus, the government should focus on developing win- win partnerships with established channels. What is also becoming clear from the funding activity illustrated above is that the developer community (consisting of designers, programmers, user experience architects, etc) is clearly becoming a force to be reckoned with in the platform wars. Also notable is the fact that the platform wars are no longer limited to mobile operating systems. Platforms will traverse social spaces, content, business models, and devices. Perhaps this is what puts Google, Apple, Microsoft and others in a position of strength, over the mobile platform titans of the past. A nod to this possibility may lie within a recent landmark announcement by Motorola, which stated that they’ve decided to adopt Google’s Android operating system on all of there flagship handsets, thereby discontinuing the support of operating systems such as Symbian.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 31 The Role of funding agencies need to be aligned with the direction of funders and multi-nationals Educators within if we are going to properly equip the province to capitalize on this opportunity. the Eco-System One of the issues uncovered in conducting research for this report is the void that exists with respect to programs or courses which focus on mobile and/or wireless technology. While there is a high probability that facets of mobile and wireless technology get Platforms, developers, handset manufacturers, addressed within the context of broader funders, and in some cases even the computer science and engineering courses, carriers are in a race to win over the the fact that we do not treat mobile and support of the developer community. wireless technology as an area of specialty Today’s consumers expect smart devices to underlies the way corporate recruiters see our do more than handle email, text, and voice workforce. Consortiums, collaborations and communications. Analogous to the way other public or non-profit organizations are the web changed the way we use personal an important first step towards addressing computers, the mobile web as defined the gaps, especially in increasing the dialogue by Apple, Google and RIM have opened between the public and private sector, consumers’ minds up to the potential that and developing strategies for growth and lies within a smart device. In doing so, it cultivating opportunities for entrepreneurs has also created new found expectations and emerging graduates. How should of what a mobile device will achieve. these relationships evolve, with the aims of Consumers expect a wide assortment of establishing Ontario as a center of excellence applications that in effect, allow them to and innovation in the mobile industry. To help personalize the way they use and interact shape our perspective on this topic, we can with the device. look to markets such as San Francisco, where the relationships between education and If we look to the personal computer industry, industry sees heavy investment in preparing wars also ensued between platforms, most their workforces for the future of mobile. notable of which was the war between Apple and Microsoft. Until recently, there Starting in the fall semester of 2008, has been a lot of debate over whether Stanford University began offering a course developer support, or the decision to focused on developing iPhone applications. partner with hardware manufacturers made Entitled iPhone Application Programming, Microsoft the winner. However, it appears the course enables students to develop and that consumers have come to recognize test applications that have been created for the relative seamlessness of an operating students. By late September, Stanford was system that runs on the device for which it already testing 5 of its own applications was built. As recently as October of 2008, which enable students to register for courses, Apple announced a 17.5% share of new units pay bills, view the campus map, look up sold within the personal computer sector. sports schedules and scores, and search the university’s online directory. Perhaps The seamlessness by which applications reinforcing the opportunity this provides for work on a device is now a base expectation businesses, the Stanford course was offered by consumers. But equally important to at the same time as Apple rolled out the consumers, is the selection of applications iPhone Development University Program from which they can choose. Therein lays the which offers a toolset to university teams battle that is being waged between Google, of up to 200 students, to develop iPhone Apple, RIM, and others. The battlefield lacks applications. While Apple was apparently a particular location at this point. Thanks one of the first major platforms to offer this in part to investment vehicles such as the type of a program to students, offerings from BlackBerry Partners Fund; an opportunity Google and other OS providers are likely in the exists for Ontario to engage in continued works, if they have not already been rolled- and critical growth. Ontario post secondary out. In Ontario, the University of Ontario educational institutions and government Institute of Technology is currently the only
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 32 institute to offer iPhone-focused courses. secondary institutions. As a testament, VeloCity has already been successful at The application-centric eco-system that attracting several business sponsors. is evolving will require more than just development skills to build market leading applications, it will require a workforce which has specialized knowledge in the areas of interface and experience design, content production, marketing, business development, and entertainment law among others. As such, the chances of one school or program being the silver bullet for Ontario’s mobile workforce by offering a crash course in new mobile applications is Moving beyond post-secondary training, slim. In order to succeed, Ontario requires graduates should be encouraged to continue a well-coordinated and orchestrated mobile the development of projects/applications workforce development strategy which started pre-graduation. Perhaps upon spans relevant post-secondary institutions, graduating, students should be provided with and capitalizes on each of their specialized access to government grants or investments if areas. In instances where students require they’d like to continue with the development some degree of training which is outside of an application or business concept. By the scope of their home school, easy access pushing students to large companies via co- should be provided to supplementary courses op programs prior to or directly following within other schools. Institutions such as graduation, we will in fact limit the potential OCAD which specialize in advanced forms of of fresh, eager, and well-trained students visualization and application interface design by constraining their thinking to the local have already started to lead the charge in market needs of most Canadian businesses. this area by providing students with the This would in fact result in a direct reversal opportunity to engage in partnerships with of our intended outcome. We must think faculties at Ryerson University, University global. If the government were to provide of Toronto, University of Waterloo and the an incentive for recent graduates to think University of Ontario Institute of Technology. and act on ideas that are relevant on a global stage, our local market will become By assembling a dream team of facilities, much more fertile for ideas and businesses focused on training students with core skills, that play on a world stage, allowing them to but broadening the depth of knowledge amortize innovation at a much higher level. and access to disciplines taught in other schools, Ontario may be better equipped to develop a mobile technology work force that is armed with a breadth of knowledge that sets it apart from other sources of talent. The big opportunity lies in establishing educational environments that foster idea germination. An example of this is an experiment called VeloCity. The University of Waterloo has invested more than $800,000 to transform a small residence into what it hopes will become a hot-bed for innovation in mobile and web technologies. By attracting upper-year students who come from a plethora of disciplines and have aspirations of starting a business or pursuing an idea and giving them access to the latest technology, industry mentors, and potential investors, the University of Waterloo is fostering an environment that is becoming a template for other Ontario post-
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 33 Conclusions As the balance of power shifts within the These will stimulate usage, and result in mobile-ecosystem, a significant opportunity the creation of more effective business has emerged for communities that possess models which could spur flow-through the skills, knowledge, and global insights to economic benefit to other local industries. develop best of breed applications for the new The Canadian consumer is indeed, an breed of smartphone devices and platforms. important player within the eco-system. To fully capitalize on this opportunity, local businesses need to have access to funds and The time to act is now. Though the a work-force that apply at a world-scale, emergence of organizations such as the not just a Canadian one. As a market, it is MEIC, and mandates such as those driven by no longer sufficient for our work-force to be the OMDC are important first steps, we need versed on Canadian or North American usage to continue to establish the framework for trends and behavioural insights alone. our local eco-system. The opportunity, as lucrative as it may be, is not Ontario’s for Canadian funders need to work together the taking and requires transformation to broaden the reach of our new-business of the approach as well as organizational funding initiatives while simplifying the relationships. With certainty, as we set out process through which entrepreneurs can to establish Ontario as a centre of excellence achieve early-stage funding. At the same and innovation for the mobile industry, time, funders need to broaden their scope many other cities, states, provinces and to include local ventures that may apply in countries are trying to achieve similar states foreign markets. Post-secondary educators of readiness to capitalize on recent shifts in need to embrace partnerships with local the mobile landscape. The potential and the and multi-national mobile players, funders, caability are poised to inform and speed the and each other to prepare a workforce development of our local mobile eco-system. that leads the world in its ability to apply its skills through informed perspectives. None of these efforts can happen in isolation. Essentially, Canada needs to further establish its own eco-system to feed and capitalize on opportunities that exist within the larger world mobile eco-system. Trade relationships need to be further developed with foreign multi-nationals, and governments to ensure our access to the global eco- system. The opportunity to secure these relationships will occur by demonstrating to the world a model that sees businesses, educators and funders collaborate. This is not to say that the Canadian consumer should be ignored. As demonstrated through the recent availability of the iPhone; when provided with the opportunity to purchase mobile data plans at reasonable rates, the Canadian consumer has a definite appetite for smartphones and third party applications. By establishing a local eco-system that is capable of global innovation, Canadian consumers will benefit by gaining access to world-class applications and services.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 34 Section One Endnotes http://wirelessnorth.ca/2008/06/30/tens-of-thousands-sign-rogered-iphone-petition/, Tens of Thousands Sign Rogers iPhone Petition (June 30, 2008) http://www.smrb.com/uploads/mobile_whitepaper_04.21.08.pdf, Experian Consumer Research: U.S. Closing Mobile Usage Gap, Ellen Romer (2008) http://www.cellular-news.com/story/33535.php, Canada’s Mobile Penetration Rate Rises to 61.6% (2008) http://traffic.berkeley.edu/, The Mobile Millennium Project: Using cell phones as a mobile traffic sensor, The Mobile Millennium Project (2008) http://news.bbc.co.uk/2/hi/2757017.stm, Text service warns of attacks, BBC (February 13, 2003) http://www.thomaspurves.com/, Where is the ‘app store’ for the greater internet?, Thomas Purves (October 23, 2008) http://www.ic.gc.ca/epic/site/smt-gst.nsf/vwapj/dgtp-002-07-The-British-Columbia-Public-Interest-Advocacy- Centre.pdf/$FILE/dgtp-002-07-The-British-Columbia-Public-Interest-Advocacy-Centre.pdf, Re: Canada Gazette Part 1 Vol. 141, No. 7 published February 17, 2007 Notice No. DGTP-002-07 - Consultation on a Framework to Auction Spectrum in the 2 GHz Range including Advanced Wireless Services, BC Public Interest Advocacy Centre (May 25, 2007) http://www.itac.ca/uploads/research/06idc.pdf, Special Study: Does ICT Matter to SMBs Canada?, Michael Hyjek and Jamie Sharp (2006) http://www.cellular-news.com/story/33535.php, Canada’s Mobile Penetration Rate Rises to 61.6% (2008) http://www.chetansharma.com/biz_ARPU.indd.pdf, Perspectives: Wireless Data APRU, Chetan Sharma (Jan Feb 2007) http://blogs.computerworld.com/iphone_browsing_marketshare_closes_in_on_1, iPhone browsing marketshare closes in on .1%, Seth Weintraub (December 3, 2007) http://us.ft.com/ftgateway/superpage.ft?news_id=fto021320081404398122, Google homes in on revenues from phones, Majia Palmer and Paul Taylor (February 13, 2008) http://apple20.blogs.fortune.cnn.com/2008/08/11/steve-jobs-60-million-iphone-apps-downloaded/, Steve Jobs: 60 million iPhone apps downloaded, Apple 2.0 Mac news from outside the reality distortion field by Philip Elmer-DeWitt (August 11, 2008) National Bank Financial, Canadian Telecom Services: The Economics of Wireless Broadband, Canada, January 24, 2008. http://mobileopportunity.blogspot.com/, App stores and APIs: It’s the ecosystem, stupid, Michael Mace (September 10, 2008) http://online.wsj.com/article/SB122523624204277979.html, Motorola Speed Dials Cell Overhaul, Sarah Silver (October 29, 2008) http://havemacwillblog.com/2008/10/28/apple-market-share-the-sound-of-breaking-windows/, Apple Market Share: The Sound of Breaking Windows, Robin Bloor (October 28, 2008) http://blog.wired.com/gadgets/2008/09/stanford-offeri.html, Stanford Offers iPhone 101: App Developing Workshop, Brian X. Chen (September 24, 2008) http://www.globecampus.ca/in-the-news/globecampusreport/but-will-they-still-eat-kraft-dinner/, But will they still eat Kraft Dinner?
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 37 Mobile Experience Innovation Centre Industry Survey Results Conducted by the MEIC, September-November 2008.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 38 Mobile Experience Innovation Centre – Industry Survey Results Conducted by the MEIC, September-November 2008. Methodology: This survey content was collaboratively developed and iterated through ongoing discussions of the MEIC Steering Committee and Working Groups, and aggregated through the MEIC Coordinator. It was released publicly in mid-September, 2008, and distributed via the MEIC industry partners, including personal mailing lists, associations such as interactive Ontario, MobileMonday and Achilles Media, for a period of 2 months. The following summary and insight is based on survey respondents from this period, raw data is available upon request. Overall Statistics • Number of Participants 366 • Completion Rate: 31.76%
  • Innovation and and Insight: Mapping Ontario’s Mobile Industry Innovation Insight: Mapping Ontario’s Mobile Industry 39 Section One: Professional and Business Information Section One: Professional & Business Information Other locations include: Australia, Denmark, India, UK, USA.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 41 Other locations include: Australia, Denmark, India, UK, USA.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 42
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 43
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 44
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 45
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 46 Please describe those partners: • Subsidiaries in the US; Commercial Banking Centres in Europe, Asia. • Telstra, Vodafone, AT&T, ZTE Corporation, UK-based Wireless Software Suppliers • Application Providers, Device Manufacturers, Consulting Firms (Telecom Industry) • Wireless Resellers / Carriers/Operators, also Researchers/Marketers/Technology Cos • Global Carriers, Manufacturing Partners, etc • Research in Motion • Partners in Asia, Europe, Africa and Australia. • Ecosystem of Complementary Partners, such as IBM, HP, etc.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 47 Our activities also include: • Understanding how this shift to always-connected devices is changing behaviours, beliefs and the social structure which guides our sense of self. • Creating marketing for wireless services and building end-user applications for wireless devices. • Commenting on wireless trends in the media; Hosting/Speaking at industry events. • Producing Customer-facing or Employee-facing productivity solutions. • Hosting and maintaining wireless provider franchise web sites • Developing revenue management software; OSS/BSS software; CRM software; etc.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 48 Please describe your experience in funding your wireless projects – what’s worked, what hasn’t worked? • In Canada there is a general lack of awareness and opportunity. The market is controlled by a tiny few operators who have secured bizarre deals with the ISPs and TelCos, meaning there is limited opportunity for innovation or new services like we are seeing elsewhere in the world. • The availability of financing in Canada is poor. We are constantly told to relocate abroad. • Paying for mainstream content is difficult as most of the distributors are seeing up-front fees - this is not a good business model to adopt by a Telco since there’s a strong chance of losing investment and not recouping. The media industry puts high value on the content yet has a hard time creating a business model that is profitable.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 51 Section Two: The Mobile Ecosystem
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 52 Additional Comments: • Acceptability of this type of technology comes from the consumer level, in respect to exposure and comfort. Consumers have only started to get exposure to mobile internet (other than home wi-fi) in the last 12 - 14 months. • Canada boasts one of the least advanced wireless industries of developing and developed nations – a slow and conservative approach prevents the wireless application market from growing and thriving, although this • Canada is behind when it comes to the global market and people adapting mobile as a platform for entertainment delivery. • Carriers don’t provide adequate subscription options for providers; fragmented and multiple integrations required; content platform providers are inefficient, slow and have no sense of accountability. • Strong R&D but weak leadership to ‘globalize’ innovations.
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  • Innovation and Insight: Mapping Ontario’s Mobile Industry 54 What are the major constraints that could affect the growth of your business? • Difficulty bootstrapping; Lack of access to capital for growth; Financing; Capital constraints • Infrastructure challenges; Rural/Northern Ontario residents have poor access to mobile networks. • Consolidation among wireless operators and delays in the deployment of new entrants’ cellular networks • Closed system of development + need to integrate customers in the value chain • The industry is risk averse and scared to make big changes or change trajectories • Lack of integrated efforts and research deployment into development process. • Competition with OEN’s where content deals are involved specific to our area. Canada would benefit from an open ecosystem which includes reasonable data tariffs. When this happens, better handsets will come. Forget about trying to build hardware, focus on creative content, web based mobile products and growing talent in professional services. Also hugely important is to start training students and design professionals now--primarily on mobile web but also mobile interaction design and the cultural aspects of mobile technology use which affect all products in the marketplace. • Challenges in network neutrality • Restrictions and additional fees imposed on consumers by incumbent cellular carriers (and subsequent further consumer distrust for mobile technologies) • Free content subsidized by advertising models from majors like Google. • Lack of technical talent and leadership talent • Global economic recession and resulting slowdown What are the major constraints that could affect the growth of Ontario’s wireless industry? • Mobile carriers locking in 1st party/partner service/app • Non-competitive carrier market • High cost of data Capital constraints Network neutrality • Cost of investment regarding carriers moving to LTE Cost of consumer adoption (i.e. too expensive) Slow adoption of m-payments / m-commerce • Industry regulation Lack of access to talent Global economic recession and subsequent downturns
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 55
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 57 Section Three: User Experience
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 59
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 61 Section Four: Skills & Training
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 62 What mobile-related skill sets or strengths do you find are in surplus in Ontario? • BlackBerry hacks. • In my area of content - we do not have enough understanding of mobile as a delivery platform for content. • Toronto’s very strong history of digital content and media will be one of the strengths going forward. So in some way, that is the strength especially compared to other provinces like BC. • Carrier experience; Physical installers / technicians. What mobile-related skill sets do you think are missing in Ontario? • Java developers are impossible to find. Emerging platform expertise near impossible to find. Challenges if you want more than engineering talent. • Cocoa developers for iPhone. • User Experience for Disabled Persons and Inclusive Design • People familiar with mobile development, right now there is no demand, nor is there any real opportunity to develop those skills, with the exception of Blackberry. • Content generation and new service offerings. • Combination of technical and interpersonal skills • Truly creative software designers; Concept and design developers • User Experience and User Interface training, design and development; Cross discipline skills: for technologists and designers to understand how to work together; Core communication skills among professionals • Complementary Web & Mobile abilities
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 63 Please describe the skills that colleges and universities should be teaching to better prepare students for future work in your industry? • Emerging open platforms, UX design skills, Java; Less emphasis on large scale software and IT development, more on agile and lean programming. • Basics of the financial services industry; Basic presentation skills, ability to create/ develop business cases. • Development and implementation in wireless GSM, Symbian, J2ME, Android. • Encourage mobile learning solutions at high schools, colleges and universities. • What are needed are graduates with problem solving skills and exposure to a variety of technology; Understanding of technology and terminology and the relationships between the various media platforms that are in a struggle to converge. • Treating mobile as an industry rather than an afterthought. • Computer Science fundamentals, low-level optimization, user interface. • Better access and less expensive tuition for tech training & application development. • Mobile web design (XHTML MP, web standards in general). • Mobile design (differences between web design and mobile ie: taking context, indirect manipulation, colour gamuts, contrast, glancing, interruptions etc. into consideration) Understanding global cultural differences in mobile usage and behaviour • Entrepreneurship for technologists & designers; technology for designers, design for technologists. • Better blending of academic and hands-on experience. • Innovation centres to facilitate ideas and business models, aimed at young talent. • Abilities to distil key success factors, critical business model elements and an understanding to identify risks and opportunities What is a success? Why or why not? • Yes, we hire regularly out of such programs and rely on interns to provide knowledge to our teams. The quality of the staff was superb. • Hit or miss. Depends on the student. • Yes, it has been a very positive experience. Students have a much higher desire to achieve the kinds of results we’re looking for and are willing to do the extra work required in order to achieve those results.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 65 Section Five: Research & Knowledge Sharing
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 66 Comments: • Gartner and Forrester are used frequently in our organization. • Some very good diamonds but in a sea of generally mediocre content that tends to be very expensive. • We do a lot of our own trending and research in-house.
  • Innovation and Insight: Mapping Ontario’s Mobile Industry 67 Was it useful and valuable? Why or why not? • I found scenario planning to be an exceptional method for a longer view of the future and a tool for managing unknown risks and opportunities years before they surface. • Yes, but our business approach is conservative, so we can’t look too far out. • Yes, we continue to use foresight tools to change our business around and to work with our partners in a strategic plan. • Our successes to date have been largely based on future-focused trends and insight. • It is always useful, planning is critical for ongoing success. • Sometimes – the challenge is keep it relevant given the rapidly changing landscape
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