Fjord Mobile Trends for '09

09 mobile trends Compiled by Christian Lindholm & team

Edition 1 Christian Lindholm 2009 Topics of Importance

Edition 1 Christian Lindholm 2009 Trend Candidates

Edition 1 Christian Lindholm 2009 Key Fjord Trends

Edition 1 Christian Lindholm App Stores are digital Innovation Bazaars Nowhere in the industry can the future of mobility be seen as clearly as in Apple’s App Store . 2009 will be a year of wonderful digital bazaars full of innovative apps and services from developers around the world. Homebrew computing will be reborn.

Edition 1 Christian Lindholm Apple’s App Store has changed everything. The predictable process of getting into the store, the application search and discovery experience for customers, and the collection of revenue has become easy. Homebrew computing will be reborn and thrive. Pangea, the creators of the Bugdom and Nanosaur games, has made $5M on iPhone apps…more than from 21 previous years of software sales. Pricing below €2 seems to unlock volumes through impulse buying. “Trial” apps with limited feature sets, free apps with ad-based business models and rental charging will also succeed. . App Stores are digital Innovation Bazaars For many years, mobile apps have been lost in the dark alleys of operator portals with poor selection, poor discoverability, and bad revenue splits. Marketers have innovated new app concepts like iPint and iZippo that make advertising a socially sharable act. The long tail of the App Store will allow the iPhone to attract great content and emerge as a true mobile gaming platform that puts pressure on the Nintendo DS and Sony PSP. These real revenue and brand exposure opportunities will start a tornado of innovation, investment, and competition that will delight users and finally unlock the potential of smartphones as open platforms. Operators, Nokia and even the major Internet portals such as Amazon, eBay, Google, MSN, and Yahoo will fight for control of these new marketplaces.

Edition 1 Christian Lindholm App Stores are digital Innovation Bazaars

Edition 1 Christian Lindholm The Cloud puts digital life at your fingertips Mobile phones become true life recorders as Moore’s Law drives processing power and memory density up and costs down. Everything you record is sent to the Cloud. These Cloud-based services safely store and effortlessly share your life. The PC is displaced as the hub and takes its place as a powerful but non-mobile client.

Edition 1 Christian Lindholm The Cloud puts digital life at your fingertips Increases in processing, memory and software capability turn phones into true life recorders. Cloud-based services safely store and effortlessly share your life. The PC continues its evolution from hub to client. Continuing and dramatic reduction in the cost of memory, increase in mobile processing power and advances in operating systems enable phones to become truly powerful life recording computers. Everything from location, photos, video, speech, audio and nearby friends becomes indexed and sent to the Cloud. The “Cloud" as embodied by Facebook, Google, Apple’s Mobile Me, MSN, Yahoo, MySpace and others is where the most relevant information about your friends lives. It’s also the place where you publish your life story, hear from far-away friends and make new ones. In the developed world, Outlook is no longer the sole repository of all personal information. The PC continues its displacement from being the primary digital hub into a powerful client that is best used sitting down at home or work. In the emerging economies and for mobile-centric teens there are even fewer reasons to centre your digital life around a PC as Cloud-based services are cheaper and more accessible, interconnected and reliable. Google’s profitable web business model and unparalleled distributed computing network gives them a massive head start. Facebook is growing at a massive rate. AOL, Microsoft and Yahoo are chasing. Nokia is struggling to get in the game.

Edition 1 Christian Lindholm The Cloud puts digital life at your fingertips

Netbooks for connected kids

Connected Netbooks quickly penetrate the connected youth market by offering better internet experiences and ergonomics than a smartphone, creating new revenue opportunities for mobile operators

Edition 1 Christian Lindholm

Netbooks will be favoured by teenagers wanting to hangout in Facebook and MySpace, chat over IM, video call over Skype, and watch videos at YouTube. This is the personal communication and entertainment centre; however their argument for getting one will be homework. It will be used continuously at school, on the bus, and in the bedroom.

The screen of 9’ to 10’ seems suitable for browsing and typical non-work related tasks and is at the same time highly portable.

The incumbents will dismiss it as a toy, falling into an innovators dilemma trap.

The opportunistic Taiwanese will find new business from the growth-hungry and cash-strong mobile operators.

Netbooks for connected kids Edition 1 Christian Lindholm The Netbook is less than 1kg and an A4 or smaller sized machine powerful enough for all the normal consumer computing tasks. It will be sold by mobile operators using 24 month subscriptions costing €30 a month. Netbooks will be free in exchange for a € 30 a month, 18-24 month subscription which will be appealing to cash-constrained consumers. As with the iPhone, Netbooks offer a business model that unlocks mobile data revenues. We expect several new consumer-friendly Linux based experiences to emerge during 2009 funded by operators. Gaining an experience control point which can act as a base for future service revenues is too attractive to pass up for the operators. Windows XP will also do well in the developed markets. Key players to watch in 2009 are Acer, Asus and HP who have some of the most innovative devices in space. Watch Carphone Warehouse to see how the business model is shaped. We predict that Apple will also enter the space, but not until 2010.

Edition 1 Christian Lindholm Netbooks for connected kids

Edition 1 Christian Lindholm TV finally goes mobile Timeshifting, placeshifting and episodification of visually rich audio/visual content is creating a TV revolution in which content is decoupled from the constraints of the broadcast model and mobile-enabled in both the time and place. ‘Transmedia’ content is now available on multiple devices and consumed when needed . This transformation will be lead by the BBC, Apple and YouTube.

Edition 1 Christian Lindholm Even better video playback from new mobile chips in 2009 and less inexpensive memory cards will make it easy to stream, sync, and download video content. The BBC’s iPlayer is spearheading the new TV which provides for time-shifting and place-shifting. Apple’s focus on video in the iPhone and iPod as well as the iTunes Store is a great “side loading” experience. Going from a controller-based linear broadcasting model to an on-demand social consumer-pulled model is a revolution that will efficiently cater to the social trend of boredom. 2009 will be the year the mobile couch potato is born. We will see consumers staring at their mobiles with headphones on as they tune in to mobile TV and tune out of reality. TV finally goes mobile 2.4” QVGA screens are becoming standard. Memory cost is rapidly falling. New phones play high-quality video and offer fast downloads and streaming. This is an attractive platform for the content industry and a boredom killer for commuters. We expect the most progressive broadcasters will start to create new forms of content which is centred around content brands, but where the content is available in smaller time chunks. Sport, news and weather will be among the first to evolve. Handset vendors and operators will want to promote these services. New business models will be created. iTunes is an early success with both renting and purchasing options. The mobile + fixed line operators offering TV over broadband will invest in mobile and strike broader content licensing deals to drive revenue and to differentiate from smaller competitors. As with YouTube before it, in 2009 we will see TV becoming more community driven and users helping to surface great content by promoting and driving traffic to it.

Edition 1 Christian Lindholm TV finally goes mobile

Edition 1 Christian Lindholm Companions at the mobile feast More users will carry companion products in 2009. For years Blackberry users have carried a smaller phone for voice . Early adopters carry the iPod in addition to a mobile as their optimised music device. In 2009 we will see more iPhones and iPod touches in users’ second pocket as an entertainment computer . The losing battle with battery life, the need to disconnect from work, high cross-operator tariffs, and the advantages of a dedicated device are the main drivers.

Edition 1 Christian Lindholm Heavy Blackberry e-mail users have for years carried a second phone for voice. Many consumers prefer to combine a mobile phone for calls and an iPod for music. The leading practical reasons include limited battery life constraining usage, a need to control the ever-presence of work, and high costs to communicate with friends on different operators. However, in addition increasingly the capabilities of a specialist device outweigh the inconvenience of carrying two devices. Their superior interaction, functionality and display means that the mobile phone is good enough for voice, text and camera, but does not compete in the delivery of media content. Companions at the mobile feast Consumer research would typically confirm that users want fewer devices rather than more. Behaviour is increasingly indicating the opposite. We do think that consumers have no problem managing two mobile devices. They increasingly realise that two companions are better than one at the mobile feast. We would expect during 2009 to start to see additional successful fusions of music + voice beyond the iPhone where users select a casual computer as their second device. This combination allows for good ergonomics and good service evolution. We also expect to see rich camera + voice + GPS combinations where the high-end mobile again grows in thickness to cater for powerful optics and great battery life for voice, mapping and life recording.

Edition 1 Christian Lindholm Companions at the mobile feast

Edition 1 Christian Lindholm Facebook status updating is addictive and the volume of updates and comments is growing explosively. Twitter has become a conversation and is moving into the mainstream. Microblogging will evolve from a naval-gazing toy to the Swiss army knife of social media . Its simplicity and openness make it very flexible and adaptable to user needs. It has the potential to combine messaging, sharing, news reading and search . The status field is the new search box. Microblogging becomes Micromedia

Edition 1 Christian Lindholm The constantly accelerating pace of modern life means less time for long form content. Microblogging will deliver customised streams of bite-size information from across the web that fits the new pace of life. We don’t have time for IM, news reading, and social networks, but they are all enjoyable and important. We need to do more with less. Bloggers will find that microblogging satisfies the majority of their need to speak out. Microblogging is often as short as 140 characters. It is simple and flexible, allowing developers to extend it and users to consume what they need. Its brevity is suited to mobile. Twitter started the microblogging phenomenon by asking: “What are you doing?” That question has intrigued millions of users and now Twitter invites new users to ”Join the conversation”. Microblogging becomes Micromedia The simple one-to-many sharing of life moments with friends and the world at large, allows people to feel connected and part of a community. Twitter’s openness and flexibility has turned into a social network, IM service, news reader, social search and sharing service. All of this still limited to 140 characters. The US election raised Twitter’s profile with the candidates setting up accounts. Celebrities from Britney Spears to Stephen Fry as well as brands such as Comcast and Dell followed, all of whom are sharing news and engaging in conversations. 13 million Facebook users update their status with simple text notes at least once every single day…and over 1M mobile replies were left on the site within the first 24 hours of the launch of “commenting” support for mobile phone users. In 2009, microblogging won’t be about blogging, it will be about the web.

Edition 1 Christian Lindholm Microblogging becomes Micromedia

Edition 1 Christian Lindholm The Android invasion There are an increasing number of Android projects under way in R&D labs around the globe. The open source genie is finally out of the bottle in the mobile industry and will be impossible to put back in. In-house operating systems will have a harder time staying alive as margin pressure increases. Operating system competitors will feel the squeeze and Asian manufacturers will take full advantage of free access to great software.

Edition 1 Christian Lindholm The Android platform is gaining momentum. There are a growing number of projects rushing to build phones on top of the platform. It is the choice of small players like HTC shaping more of their destiny, Chinese manufacturers competing on a more level playing field with Nokia and mobile operators wanting an environment they can customise at will. It is expected that both Samsung and LG would follow their past strategy of endorsing all operating systems. Their processes are well suited to many independent and parallel projects and they will make beautiful and exciting Android hardware. Android is one of Motorola’s last lifeboats, but long term it becomes increasingly harder to see what makes Motorola unique in the market. The Android invasion As R&D budgets are tightened, managers look to fast solutions. This could help Android mature faster, when managers worry about surviving next year, rather than worry about being strong in five years. Operators will certainly endorse Android as they see it as an open platform which they can customise. However, as the iPhone has proven, a mobile platform really shines when developers innovate on top of it. The challenge with customisation is that it can be easy to “break” developers’ existing applications. Operators and manufacturers will have to walk a fine line between differentiation and developer disruption. The developers, development tools, linkage to Google “cloud” services, indexing of generated data and continuous improvements to the platform remain crucial control points for Google. Android is still a primitive, unpolished user experience and lacks meaningful differentiation. Search as a user experience paradigm has not been leveraged. The current platform lacks all sex appeal. Aggressive innovation is needed.

Edition 1 Christian Lindholm The Android invasion

Edition 1 Christian Lindholm War for the world Nokia has dominated the low-end, high-volume end of the mobile market for years, constantly being challenged by numerous small players driving down cost. In 2009 this battle to connect the world’s population will heat up and the dynamics will change as both Samsung and LG will bring out an arsenal of low-end devices and operators will continue to steer volume to non-branded ODMs and aggressive Chinese OEMs like ZTE and Huawei.

Edition 1 Christian Lindholm We think both Samsung and LG need to step up in their marketing efforts as these markets are not controlled by operators. Nokia is pushing ahead with much more advanced marketing that engages people and their communities. Mobility is widely perceived as a universal good and currently Nokia is seen in many markets as the branded messenger spreading the word. The Chinese play by their own rules in IPR and elsewhere making it harder for LG and Samsung who have to make a choice whose game to play. Nokia has been able to live a double life due to their powerful IPR portfolio. We think there is a massive opportunity for innovation in the low end and selling cheap voice alone is not a sustainable strategy. War for the world As the mobile industry brings voice and SMS to the entire human population, the battle for control heats up and the dynamics change. Making cheap and cheerful mobiles has little to do with making high-end feature monsters. We believe that the current economic climate will accelerate this polarisation. A major opportunity will emerge by combining focused internet experiences with low-end terminals. For example, Opera enjoys considerable success in the emerging markets and we expect Facebook and other applications and service providers to follow. By building great mobile applications one could radically change the perception of the internet. Also, more powerful and much cheaper chips tied with the emergence of viable open source software platforms such as Android will allow cutting edge software innovation from the US and Europe to help accelerate the Chinese and other Asian manufacturers.

Edition 1 Christian Lindholm War for the world

Edition 1 Christian Lindholm QWERTY goes consumer Tweens are messaging natives and social network addicts . They will look for more efficiency from their mobile and will start selecting QWERTY keyboard devices in increasing numbers during 2009.

Edition 1 Christian Lindholm The small QWERTY mono-block device is becoming a dominant design and moving into the mainstream. Nokia has finally built a small QWERTY keyboard worthy of challenging the Blackberry with the E71. Nokia will become a major challenger with the low cost E63 and Nokia’s strategic focus on enabling e-mail for the 80% of the world that does not have an account. We expect RIM to aggressively push into lower price points, improve their consumer offering and grow their market share in 2009. The lower price points and improved software have already made devices like these the favourite among the American Facebook generation who spend so much time communicating using social networks, SMS and images. QWERTY goes consumer The Blackberry’s relentless focus on a small QWERTY keyboard and e-mail has transformed the industry. Entering text on a small QWERTY device is on average about twice as fast on a 12-key phone with T9 predictive text input. We will see many more QWERTY devices emerge during 2009 with many types of operating systems. We expect lots of innovation in clever prediction, error correction, combined with clever mechanics for greatly improved ergonomics. We think these devices will become especially addictive when bundled with apps from Facebook, MySpace and Skype. In 2009 HTC, Nokia, Samsung and LG will chase RIM into the consumer market. Microsoft’s acquisition of Danger in early 2008, may also result in a more multimedia-centric QWERTY product.

Edition 1 Christian Lindholm QWERTY goes consumer

Edition 1 Christian Lindholm Location becomes the new service bedrock Nokia is aggressively investing in location and their strategy of coordinating people’s lives using maps is compelling. Google is the main challenger with ubiquity on the web and working hard in mobile. Location awareness in mass market phones will lay the foundation. The massive scale of investment is creating insurmountable entry barriers for smaller players. Maps are the service Trojan Horses for both Google and Nokia.

Edition 1 Christian Lindholm Location and the services built on top of maps will become one of the hottest topics in 2009. Nokia and Google will charge forward, Microsoft and Yahoo! will chase them and others will react. Start-ups will continue to proliferate and be acquired. The opportunity to innovate on top of location is enormous in many areas ranging from social networking, to enhanced communication, to rich advertising services. Tremendous new value will be created. All of this is fueled by GPS enabled devices at significantly lower cost as well as new generations of hardware and software making positioning faster, less power hungry, and more accurate including the ability to have continuous positioning even when indoors. Traditional publishers will start to feel the pressure. Location becomes the new service bedrock Location will be the bedrock of compelling consumer mobile services with enormous monetisation potential. The current methods of overlaying information on maps do not scale and will run into problems. There is a need for innovation in how to contextually search for and find things. One challenge for the mobile industry is to crack the concept that will bring local businesses and consumers together in a common experience where businesses can prosper and consumers get rapid access to information. Mapping data requires similar investment to an operating system and needs to extract local knowledge from people to enrich the experience. Only locals know where the best coffee is served. TomTom and their core asset Tele Atlas is an expensive but likely acquisition target.

Edition 1 Christian Lindholm Location becomes the new service bedrock

THANK YOU! Edition 1 Christian Lindholm