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  1. 1. What’s NOT Going to Happen in 2011Prediction ain’t easy. But that doesn’t stop many would- Reality and flexible displays. If you need a time boundarybe pundits from trying to read the 2011 tea leaves, with around all this, you could say it’s “the decade for mobilesometimes hilarious results. The antidote? ABI Research’s marketing.” But even that is too limiting and fuzzy,annual take on what’s NOT going to happen next year in because at some point mobile will just become a facet ofmany of the markets we study. all marketing, along with “social” and whatever else gets invented in the coming years. Enough with these silly “yearThe holiday shopping season is upon us, and some say of ” proclamations!– where have we heard this before? – that Real Soon Nowmobile marketing will transform our buying habits. Or Among the serious players, the common assumption is thatnot! mobile marketing is headed for a growth spurt. There is little doubt of that. The simple fact is a growing number 2011 won’t be the year of mobile of eyeballs – tens of millions of them – will be staring at marketing and advertising for smaller screens in the coming year: searching, comparing a number of reasons. and shopping. This will be enough to move the needle next year, even if it’s only a little bit. Smartphone sales are going For one, that is just fuzzy to continue to soar. Consumers are going to buy tablet thinking. Mobile marketing devices in growing numbers. In short, mobile audiences are isn’t a one-year wonder. spiking, and marketing dollars will follow. This is not hype. Marketing via mobile devices And despite the challenges previously mentioned, forward- is an ongoing business practice, looking marketers have good reason to spend some of their just as it is in other media. budgets on mobile. Those who don’t will miss out on anMobile marketing will still represent a small portion of opportunity, and run the risk of competitors taking marketthe bigger pie when compared to online and traditional share.advertising for quite some time. The volume of spendingwill only be a fraction of the total, even in five years. Location-based advertising will NOT be huge.Finally, there are still serious challenges to overcome: clear Without a doubt the Location-based Advertising (LBA)measurement standards need to be established (those market is going to happen, it’s just unlikely to happen inare coming), audiences are still relatively small (though 2011. The LBA gun is loaded, with GPS proliferating,growing, to be sure), mobile budgets are puny, ad agency app stores established, location information aggregatedsupport is lacking, too many platforms clutter the space, and trigger-happy advertising agencies already trialingand consumers remain squeamish over privacy concerns. LBA with huge success – so why not 2011? Well, first and foremost, the overall mobile advertising marketA better way to look at mobile marketing is to say it’s here is still in its early stages of development. Add to thisto stay. It will grow and change. Already, marketers need the uncertainty surrounding awareness, privacy andto consider how to play in the tablet arena. Further out, successful advertising techniques, and it is clear that thisthey will face questions about how to exploit Augmented market will take time to mature.© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 1including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  2. 2. Many advertising agencies have said that it is still too early wheel in the correct direction if potential drift is detected.for LBA in 2011. In fact, ABI Research estimates that just Collision warning systems can automatically stop cars to2% of on-deck and off deck LBS (location-based services) avoid accidents and pedestrians. What this means is thatrevenues will be generated through LBA in 2011. So what some types of driving can now be automated . . . just notconstitutes “happening”? Well, by 2016 this segment whole journeys.will have grown to 15% of a multi-billion dollar market.Furthermore, that forecast does not even include location- The good news for 2011 is that these systems will becomeenabled services such as Google and Facebook places, available on some mid-range vehicles and not just on high-which highlight the potential for smaller LBS developers. end luxury cars.So thank goodness all those shopping offers are still coming OK, forget the auto-pilot. The all-electric Nissan Leafinto the “conventional” Internet we access at home and in debuted in a number of countries in 2010, but guess what,the office. Because smartphones won’t replace computing we’re NOT all rushing to buy electric cars.devices for access to the Internet Auto buyers the world over are not going to rise up in 2011Smartphones—with their complex user interfaces—are and say, “We need electric cars. Bring us the electric cars.”still far too daunting for the average consumer. Usabilityproblems with the physical size of the mobile device form For one thing, the infrastructure for them has not yet beenfactor, including the small screen size and limitations of built out, so “Range Anxiety,” the fear that you’ll drive youruser input, still hamper intuitive and comfortable use for electric car too far from a charging station to make it backall but the most determined users. home, will rule. When people start to understand how using the radio or the air conditioner in an electric car canSometimes there’s no getting around it: Internet or no, you shorten battery life even more, that fear will grow.just have to go out to shop. In the US and other spread-outcountries, that usually means driving (unless you’re rich Cost is another consideration that will depress sales ofenough to have a chauffeur!) What a hassle, especially the electric cars. They’re not cheap to start with, but since theyparking! But Google revealed in October that a vehicle it have some cachet as new and cool, auto dealers mark updeveloped had been quietly driving itself around California. price tags like mad, looking to gouge extra thousands fromThe car was doing all the navigating and driving, and was people willing to put down $1,000 or more just to get on acapable of unconventional parking maneuvers. (http:// waiting list for the things.www.youtube.com/watch?v=_piO849uRdI). Publicreaction to one article covered the gamut from “I want thisyesterday” to “You can pry my car keys from my cold, deadhands.” But we won’t see self-driving cars in 2011.The Google experiment reports that vehicles have coveredover 140,000 miles of testing with the occasional humanintervention, but more than 1000 miles of journeyshad no driver control used at all. Despite this success,engineers still see 8-10 years before anything like thisgoes into production. Then there’s the cost to fuel the vehicle. Remember, you won’t be spending 10 minutes at a gas station once a weekBut some significant pieces of this overall package are on or so to fill up; you’ll be plugging the car into your personalthe road today. Adaptive cruise control can maintain a charging station to recharge the batteries over the coursechosen speed if the road is clear, and automatically adjust to of several hours, perhaps overnight. Unless you knowslower vehicles moving in front. Lane keeping systems can somewhere that you can plug the car in and charge up formonitor the road markings ahead and nudge the steering free, you need to consider the cost per mile of a recharge© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 2including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  3. 3. that can take you 40, 50, 100 miles, vs. the cost per mile of a So what is on your holiday wish-list this year? And if youfill-up at a gas station that can take you 200 miles or more. can’t have it in December, what tech gadget do you craveIn terms of time, a gas or diesel-fueled vehicle wins hands- in 2011? Want a quad core smartphone?down. In terms of expense, it’s a close race right now. Yes please! . . . just not in 2011. With clock speeds estimated to reach 2.5GHz, delivering up to five-times improvement inIf you’re thinking of buying an electric performance as compared to most currently available processorscar for environmental reasons, think while requiring considerably less power, the quad core processor seems set to revolutionize the mobile handset industry.about where that electricity comesfrom. Yes, quad core chipset will power a rich multimedia computing experience on a smartphone . . . . but not in 2011. Why not?Finally, if you’re thinking of buying an electric car forenvironmental reasons, think about where that electricity First, ARM, the leading processor architecture IP provider,comes from: a big, smelly power plant that’s more than likely is still in the early phases of chipset design development.fueled by coal and is releasing plenty more hydrocarbons Further, the chip needs to be manufactured in 32nm, orand other unhealthy stuff into the atmosphere than a smaller, technology in order to achieve targeted operatinggasoline-powered car does. So where are the savings? performance and energy consumption characteristics expected of a smartphone. As a result, there will beBottom line: electric cars will remain a novelty in 2011. inevitable need for more time, prototype development, validation, and mass production. The smartphone marketWhether we’re driving electric or petroleum-fueled cars, will see eventually quad core phones, just not in 2011.we have become ever-more addicted to our navigationdevices, and smartphone navigation has been making There’s another kind of smartphone that hype-merchantsserious inroads in this market. But they won’t complete have been touting: the NFC-enabled one. But UStheir conquest of the car in 2011. consumers won’t be giving up their wallets in favor of NFC-capable smartphones in 2011A lot of the debate in the telematics industry during2010 has centered on the integration of smartphones and Smartphone industry heavyweights such as RIM, Samsung,applications into the car environment, with Ford SYNC’s Nokia and Google have committed to bringing NFCplanned entry into the application store space and Nokia’s (Near Field Communication) functionality to smartphonesTerminal Mode grabbing the headlines. However, while in 2011. With NFC many expect that US consumers willthere is no denying smartphones will play an important ditch their wallets and use their phones to pay at the localrole as remote controls and monitors of connected vehicles, grocery store, at a ball game, or a gas station. Early test trialsthey will not replace embedded telematics systems which of this have shown very promising reactions from users.offer superior reliability, ease of use, and above all a safer ABI Research believes that in the future phone paymentsuser experience, the major handicap of smartphones as will be extremely popular in the US; but not by 2011.repeatedly pointed out by US regulators during 2010.Openness and affordability will be critical success factors Today many folks do not carry cash in their wallets/pursesfor embedded telematics platforms, both of which are because they know that they will be able to find a locationaddressed by the GENIVI automotive infotainment that ‘takes plastic’. Initially, however, not every merchantconsortium and initiatives from Continental and Bosch. took Visa, or Discover, or whichever card service theAutomotive OEMS should not hand over control to the consumer was a member of. Without a majority of the banksmobile industry, keeping their options open to tap into new and mobile operator agreeing to a unified approach, NFCrevenue streams and customer relationship tools offered by payment systems may suffer from payment fragmentationthe connected car revolution. much like that faced by credit cards in their early days.© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 3including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  4. 4. Unfortunately the fact remains that the banking industry out. This is one reason why GaiKai has chosen to focusand the mobile operators are not ready to go mainstream initially on demonstration games (prequalifying potentialwith this yet. Both want to ensure that they get their ‘cut’ of users for QoE before offering demos) rather than a fullthis new service capability and that there is a solid business service. Perhaps most important, game libraries still palemodel in place. While the big four mobile operators and in comparison to the preexisting PC and game consoleDiscover have banded together to solve this problem, platforms. In addition, the smaller user base limits theother card-issuers such as Visa are still investigating their multiplayer appeal.options. Operator billing systems are notoriously outdatedand would need much work to get ready for this type Game consoles are also adding many of the featuresof feature, and the US banking industry has remained found in connected Netflix and other VOD platforms;woefully behind the rest of the world in the adoption of word that Microsoft is considering a new video servicemobile capabilities. beyond Xbox Live is a prime example. Video services such as Netflix (all current generation consoles), Hulu+Getting these juggernauts to dance in sync is going to take (PS3 and soon Xbox 360), and ESPN3 (Xbox 360) havea great deal of negotiating, time and effort. found their way to these devices as well. While OnLive is also reportedly interested in starting a video serviceWhile some preliminary test services may go live in 2011, (as are Amazon and other companies) the installed baseNFC will not have reached mass penetration in smartphones of the game consoles far surpass OnLive, which shouldas Wi-Fi has. The small user base will make it difficult to provide Microsoft, Sony, and Nintendo more negotiatingconvince smaller retailers to pay for NFC payment terminals weight (Sony owns a large amount of content as well.)(and possibly terms) until the larger retailers have proven the Another prediction for 2011 -- the video service/rentalbusiness model and generated both awareness and demand. market will not get any easier to navigate.This will further slow the adoption of terminals and pushmainstream penetration further out. 2011 will be a transition year for gaming as new devices such as the Nintendo 3DS (and possibly a new PSP and a newVideo games are of course perennial holiday favorites. But Wii) hit the market. New peripherals such as Microsoft’sare consoles now for the birds? Nope, 2011 will NOT be Kinect and Sony’s Move will redefine the capabilities ofthe year Cloud Gaming dampens console sales. this generation of consoles. If sales slow, it won’t be because competition is beating them, but because this generationAre slowing sales of Nintendo’s Wii and growth in of consoles is maturing. While there’s still plenty of roommobile gaming a sign of this transition? With all the hype for growth, we must remember that previous game consolesurrounding server-based gaming services such as OnLive, generations usually lasted five or six years; the Xbox 360 justmany in the media have been quick to anoint these services turned five this year. The PS3 and 360 (and possibly evenas the future of gaming (replacing consoles). Adding fuel to the less advanced Wii) look to have a few more years left inthis fire Nintendo even suggested that Apple, not Sony, is its their lifecycles.greatest competitor in the portable gaming market. Whilenot out of the realm of possibility, this certainly won’t come This year few would be surprised to see iPads underto fruition in 2011 (or even within the next few years for the Christmas trees of the well-heeled. But PCthat matter). vendors won’t challenge Apple’s early leadership in media tablets.Game consoles and portable game players fulfill aparticular set of needs and demand that are often (at least The iPad was not the first media tablet (the first tabletsso far) inadequately satisfied by other services/devices. started appearing in retail outlets about nine months beforeCloud-based game services could suffer from latency Apple commenced shipments), but Apple was certainly theproblems (particularly with regard to certain game types first brand marketer with a significant budget to promotesuch as first person shooters). More servers are needed to the device segment and achieve greater than one millionaddress this, which will require time and resources to roll units shipped.© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 4including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  5. 5. While most tablet vendors are introducing first-generation In 2011, netbooks are expected to remain more populardevices aimed at diffusing the iPad’s impact, a next-gen than media tablets. But demand for devices with embeddediPad is expected to be announced in January that addresses mobile broadband modems will NOT overtake demand forcurrently perceived shortcomings. external modems. The USB modem form-factor is convenient for mobileA lack of iPad competition in 2010 will network operators (the leading sales channel for mobilegive way to a crowded mix of OEM and broadband modems) to stock and support. Despite some mobile network operators witnessing a decline in USBwhite box players during 2011 modems as a percent of total devices, USB dongle shipments, continue to rise both regionally and globally. Subscribers are generally opposed to additional subscriptions for each device connected to a mobile network. Instead, they favor creation of shared data plans or ways to consolidate billing. Further, new 3G (HSPA+) and 4G (WiMAX and LTE) networks continue to launch in all parts of the world, which results in a significant upgrade opportunity for current mobile devices. Few will replace existing devices and computers because they subscribe to a new network. ABI Research observes a nine to 12 month gap from the time subscribers join a mobile network before they consider replacing current devices. Royalty costs for mobile broadband modem technologies remain significantly less for external modems (which are calculated as a percentage of the device’s total bill of materials) compared to a fixed cost for an embedded modem module. These trends are resulting in adoption of mobile hotspot routers, with network operators looking at ways to retain subscribers in the longer term instead of merely seekingA lack of iPad competition in 2010 will give way to a crowded multiples of revenue per user.mix of OEM and white box players during 2011. The marketshare for Apple will drop accordingly, but no single vendor will Mobile hotspot routers provide the benefit of a single databest the iPad’s shipments as it turns one year old in April. The subscription (and therefore cost savings) for multi-devicenon-Apple ecosystem of vendors offer a fragmented content users. These intermediary communications devices allowand application story (even though 75%+ of commercially existing Wi-Fi-enabled products to connect to the wirelessavailable tablets are using the Android OS) compared to wide area networks. These devices, while not a significantApple’s closed iTunes App Store content platform. contributor to modem shipments so far, are postponing the need to replace mobile devices with embedded versions.ABI Research has also tracked the netbook device segmentsince its inception in 2007. While media tablets have seen The holidays sound like a good time to set up that long-excellent growth in their first year, they are not shipping planned home media network. But interoperability issuesfaster than netbooks did from their “day one.” will be around for a while.© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 5including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  6. 6. Sorry: home networking is not going to move to a single The holidays will be over all too soon, and the “real world”standard in 2011. will intrude again. What else won’t happen in 2011?Home networking is a growing area of interest as more and The carrier community will not handle the traffic explosion!more devices in the home offer connectivity options. It usedto be that the only connected devices in the home were PCsand laptops. Now, TVs, Blu-ray players, mobile phones, Our ostrich-like cousins in the carriertablets, and set-top boxes are all vying for IP addresses. world will have their heads sharplyMuch of the need for home networking has been covered by yanked from the hole in the groundWi-Fi in the home. Wireless home network adoption is onthe rise, home network equipment vendors have made setupand maintenance easier, and consumers have become more We thought AT&T’s network troubles with the iPhonecomfortable with terms such as routers, SSID, and WPA. were the worst our industry has seen but that was just the tip of the iceberg. 2011 will see the number of smart devicesHowever, Wi-Fi doesn’t make the grade for many managed such as smartphones, tablets, netbooks, M2M products andvideo services requiring high reliability and high bandwidth. cellular-connected PCs skyrocket. All these products willAs a result, a number of other ‘no new wire’ home network be generating traffic levels equal to, or in excess of, 2010’stechnologies have developed and been deployed for several iPhone traffic. Our ostrich-like cousins in the carrier worldyears.These include HomePlug,HomePNA,and MoCA.Each will have their heads sharply yanked from the hole in theof these technologies has its own strengths and weaknesses ground as networks grind to an agonizing crawl in 2012.but the one common thread is years of development, trials, Only then will carriers actually start making inroads onand deployments by operators around the world. A lot of adopting more innovative network designs aligned with thediscussion has now focused on G.hn (HomeGrid) as a usage demands of today.standard to replace these incumbent technologies and offer asingle standard that operates over all wire types. Femtocell offload will NOT be the solution of choice for countering this data tsunami.While we certainly believe G.hn will eventually find itsplace in the market, we don’t believe G.hn will replace all While the data tsunami has been washing up on operators’of these other technologies, especially not in 2011. Sigma shores during 2010, many solutions have been proposed toDesigns is one of the first to announce a chipset supporting counter the threat, including Wi-Fi, femtocells, core offload,G.hn. However, this device will not come to market until the media optimization, caching and CDNs. Most operators arefirst half of 2011. After the chipset is released, operators are sticking to the path of least resistance and choosing Wi-Figoing to want time to evaluate and trial the technology in as the first choice for data offload. Operators are known tohomes. These operators do not typically move very quickly, be going for desperate measures urging consumers to useso we expect to see a long lead time for actual deployments. Wi-Fi as and when available.All the while, companies involved with the legacy In the process operators seem to be acting against their owntechnologies are developing HomeMesh -- hybrid chipsets self-interest with little concern about the traffic completelythat support multiple home networking standards, or “glue” bypassing their networks and the resulting loss visibilitytechnologies that bind two chipsets into a single network. of the consumer. Free Wi-Fi is winning out in the short/Examples include Atheros which has recently announced medium term over carrier-integrated Wi-Fi, as the latter isa solution combining Wi-Fi, powerline and Ethernet. known to have additional cost and management overheads.Broadcom’s acquisition of Gigle Networks positions the On the other hand femtocells are still stuck in ‘coveragecompany to design highly-integrated SoCs utilizing limbo’ where operators have been unable to break out ofHomePlug, MoCA, Wi-Fi and Ethernet. So, while G.hn the coverage-related churn reduction proposition, in effectcould grab market share by offering operators an alternative, missing out on the data offload and capacity enhancementit won’t be in 2011. proposition that femtocells bring to the table.© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 6including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  7. 7. Operators that provide femtocells have largely stuck to The Wholesale Applications Community will not gothe consumer market and are expected to expand to the anywhere fast.enterprise market in 2011. However when it comes to usingfemtocells as an offload solution in metro deployments, few After adding significant numbers of members this year,operators are likely to tread that path soon. For operators the initiative looks to be plagued with divisive intentionsto get their heads around femtocells in consumer and and counterintuitive political forces. It is a simply case ofenterprise settings is itself a big leap of faith. Security, too many cooks spoiling the broth. While the consortiummanagement and interference issues are exacerbated in a wrangles to get everyone’s input accommodated in a highlymetro-class deployment where hundreds or thousands of politicized environment, other apps initiatives – driventhese devices would be lit up. It will probably be 2012 before ostensibly by single powerful entities – are running awayoperators are comfortable with consumer and enterprise with the swag.femto deployments, giving them the confidence to expandthese to the metro.LTE consumer femtocells are unlikely to be BlackBerry will NOT be eclipsed by enterprise iPhones.deployed in 2011. As much as everyone likes to point to how the iPhone willThe consumer femtocell market is picking up steam with kill the BlackBerry in the enterprise . . . . it won’t happen.more than 17 operators across the world having launched The iPhone is flawed from a security perspective and cannotconsumer femtocell services. ABI Research estimates that support some of the mission-critical behind-the-firewallmore than a million femtocells will have been shipped in apps that are seen on the RIM platform. The iPhone will2010, the majority being consumer products. While there make inroads in personal use in the enterprise (as willis a CDMA femtocell market concentrated in the US, the Android based products) but the corporation sensitive tobulk of femtocell shipments are known to be coming from security breaches will keep to the BlackBerry path. Just lookWCDMA/UMTS femtocells. This is likely to be the case to the tightening of information control in the financialin 2011 as well, with many operators moving to the second vertical to see where this is going enterprise-wide.phase of rollouts, expanding their femtocell coverage andlaunching enterprise femtocells. Moreover . . . .However LTE femtocells are unlikely to see the light ofday in 2011, especially in the consumer market. Whilethere could be some prototype LTE metro femtocells (aka Android will NOT begin to eclipse Apple in 2011.LTE picocells) launched, we are unlikely to see anyoneoffer LTE consumer-grade femtocells. This is because the Licensing ideology aside, Android’s primary valuedevice ecosystem for LTE is still maturing with a limited proposition is a less expensive and more flexible alternativeset of dongles on offer moving to LTE smartphones mid- than Microsoft’s Windows Mobile for handset OEMs.2011. High-bandwidth backhaul (10 Mbps+) is a key There are no improved technology or standout featuresrequirement for LTE femtocells to be effective, and that that make products significantly more attractive than theis still not ubiquitous across most parts of the developed iPhone.world. The bigger reason we are unlikely to see LTEconsumer femtocells is that femtocells are still seen as a Handset OEMs will continue to release an abundance ofcoverage solution and not as a capacity solution. With the models running Android, most without strong technologyLTE proposition being capacity-based, and with WCDMA or feature differentiation. Android may win the volume war,femtocells still being sold as a coverage enhancer, 2011 is but how many OEMs and models will it take to best anunlikely to see the market dynamics change drastically. iconic device from a single vendor?© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 7including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  8. 8. Nokia will NOT collapse in a heap. the potential will be there for smart meters to communicate with any number of WSN devices such as thermostats and lighting controls, and while those devices are increasinglyAs ever, the major concern is that available, the utilities’ conservative approach to enablingNokia doesn’t continue to be too communications between the meter and end-user devices will limit the potential beyond 2011.arrogant to take this opportunity M2M markets will NOT achieve significantAlthough much in the media (especially US-centric media) standardization in 2011.has been said about the eventual demise of Nokia it must berecognized that this is an absurd concept. Nokia still ships In 2010, M2M, particularly using cellular technology, hitmore smartphones than anyone else. Moreover, Symbian- the mainstream, with a slew of major mobile operatorbased products will provide the preeminent smartphone announcements around partnerships, M2M-dedicatedsolution for the democratized smartphone. It must also business units, new technological capabilities, and so forth.be remembered that there is an incredibly potent new OS M2M is now commonly accepted as a core strategic remedysolution looming in the form of Meego. That, coupled with to the growing saturation of the traditional voice-centricnew management and the desperate need of the carriers mobile market.to find a supplier they can bully in the usual way (unlikeGoogle and Apple) creates a world of opportunity for the In response, major international standards developmentsupplier. As ever, the major concern is that Nokia doesn’t organizations, including ETSI, the ITU, the TIA, and thecontinue to be too arrogant to take this opportunity, or Chinese CCSA, are formulating standardized frameworkswastes even more time developing an OVI strategy that that span across both vertical industries and variousalienates its core customer base. communication technologies. Most of these efforts started in 2009 and several are slated to conclude by mid-2011.Smart meter rollouts will NOT lead to adoption of smartWireless sensor network (WSN) devices connecting to the But while comprehensive standardized frameworks willmeters within the home . . . . at least not in 2011. eventually be instrumental in reaching the full potential of a connected world, in 2011 they will face two key challenges:The smart meter market has been poised to take off for sometime, powered by these devices’ ability to enable utilities • Mobile operators and third party vendors haveand their customers to better manage power resources and already developed and deployed systems thatusage. The goal is a smart reader-enabled power grid that incorporate existing communication standards, butcan leverage bidirectional capabilities not just to monitor they integrate these into proprietary frameworks.and record usage, but to change consumption when needed Eventually they will adopt standardizedand when possible. frameworks, but not until forced by overall market development needs, and not until they’veThe meters would also communicate with individual developed new avenues towards differentiation.systems and devices in the home so that usage best fitsthe consumer’s requirements and the power grid’s ability • Vertical-specific standard framework developmentto meet them. Initial trials have gone well and there are efforts, such as NIST in the context of thegovernment incentives in many countries to help utilities US smart grid, will compete for attention andturn their networks into smart bidirectional communication development activity. This will be particularlysystems. A number of projects were launched in 2010 and true in the areas of smart energy and telematics,deployments will continue to expand during 2011. and will engender an environment of “too many” standards in the short term that willHowever what we will not see are these deployments lead to a temporary pause on the path towardspushing adoption of WSN devices within the home. While comprehensive adoption of standards.© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 8including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  9. 9. The ITU still WON’T have the right to define 4G in 2011. markets in the Asia-Pacific region are still trying to settle in 3G services, such as China and India. Some others, such asThe ITU has caused confusion in the industry to the Thailand, have yet to issue 3G licenses.point where some people really believe that the ITUdefines 4G. But 4G is not a specification or a standard. It There are definitely growing numbers of LTE trialsmerely is shorthand for fourth generation mobile wireless announced around the world, especially in countries withtechnology. mature telecoms markets. However, it will more likely be 2012 and 2013 before we see substantial licensing of LTEIn fact, the ITU does not create or define WiMAX or spectrum.LTE either. The ITU sets criteria for existing and proposedtechnologies to meet – including speed and latency – so it While it is true that major operators will be making somecan group them together with specific spectrum bands. This large footprints of LTE operational to some degree, it couldallows technologies to achieve better economies of scale and be years before it really becomes ubiquitous. If we cast ourallows for easier roaming between countries. 802.16m and minds back to the rollout of WCDMA it took over a decadeLTE-Advanced meet the ITU’s criteria to be designated to get where we are now.IMT-Advanced. But IMT-Advanced does not equal4G. WiMAX and LTE, which are forward-compatible The modern environment has several competing serviceswith 802.16m and LTE-Advanced, respectively, are 4G for wireless data that range from GPRS to WiMAX.technologies. While it is certainly true that lower speed air interfaces are a different kettle of fish they do compete for wireless data subscribers and are doing quite well especially in theThe ITU does not control the term 4G developing world where the lowly GPRS and EDGE havetoday, and ABI Research believes it been transformational in areas that barely had telephone service.still won’t control the term next year. In addition, discussions with component suppliers aboutThe ITU does not control the term 4G today, and ABI “how their LTE business is going” usually bring chuckles ifResearch believes it still won’t control the term next year. not outright laughter. As the old lady said in the 1980’s TV commercial for hamburgers, “where’s the beef?” LTE will NOT be massively deployed TD-LTE will NOT kill off WiMAX in 2011. With LTE commercialized Mobile network equipment supporting TD-LTE is only in Sweden, Norway, Poland in trials now. The most optimistic in the industry expect and the United States, networks to be commercially launched during the second and by NTT DoCoMo half of 2011. More conservative views may acknowledge just before Christmas 2011 launches but see the market for TD-LTE picking up 2010, expectations have more in 2013. been heightened for the widespread and rapid Either way, for current WiMAX service providers toadoption of LTE. Certainly, momentum is picking up, but switch to TD-LTE, a lot has to happen. If there is nowe should show some caution. unused spectrum, WiMAX service providers will have to degrade their service and essentially divide the spectrumSpectrum and licenses are not yet readily available in most up, impacting capacity and network speeds. They will alsocountries. A case in point: the UK’s spectrum auction have to replace end users’ devices with more expensive LTEwill only take place in 2012: an irony for a country in the devices (especially if they are multimode 3G/LTE devices)forefront of technology. Furthermore a number of developing if they do not have dual WiMAX/LTE chipsets in them© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 9including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  10. 10. already. They will also have to adapt their core network In 2010, China had more than 10 million fiber-to-the-for LTE. The Greenfield WiMAX service providers who home broadband subscribers. China Telecom and Chinacould barely afford to put up their current networks may Unicom are the country’s main fiber broadband operators.find it difficult to achieve this. The perception here is not Although fiber broadband deployment is increasing steadily,the reality. the availability of FTTH services is limited to some of the big cities. Both China Telecom and China Unicom areHuawei will NOT become the #1 wireless infrastructure planning to invest more on FTTH rollout. However, thevendor in 2011. network upgrade plans are especially targeting Shanghai, Beijing and some other cities.While Huawei has been conveniently stealing market sharefrom its traditional wireless equipment vendor counterparts, The high cost of fiber and the lack of demand for highthe question on everyone’s lips is: will Huawei become the bandwidth applications are among the major challenges#1 vendor displacing the long-standing behemoth Ericsson? of China’s FTTH development. Vast deployment of videoHuawei is known to have been closing on Ericsson’s lead, applications such as IPTV which need high speed broadbandgaining 5-6% market share between 2009 and 2010. Huawei will drive the growth of FTTH deployment in China.is now known to be in the #2 spot closely followed by NSN Without government support and attractive new servicesfollowed by Alcatel-Lucent and ZTE. to offer over FTTH broadband, China’s fiber broadband adoption will not be in the top position among the countriesHowever, 2011 is unlikely to see Huawei gain the #1 spot in Asia Pacific.due to recent market consolidation. According to ABIResearch estimates, the merger of NSN and Motorola Chinese authorities will NOT be issuing 4G licenses inmakes it a strong contender for the #1 position in 2011, 2011.overshooting Huawei and closely beating out Ericsson.Huawei seems to be losing steam as deployments in China For the past seven months, China Mobile has been field-and India have peaked. The lucrative North American testing TD-LTE, but the authorities are unlikely to issuemarket has been a tough nut to crack for Huawei. Security 4G licenses for the Chinese market just yet.concerns in the US have prevented Huawei from gainingsome of the recent LTE deals with AT&T, Verizon, andmost recently one with Sprint, which is likely to be a big It would be prudent for the Chinesedisappointment for Huawei’s regional ambitions. While authorities to license TD-LTE soonerHuawei is gaining traction in Europe, winning many of rather than later.the LTE contracts, the fact that LTE revenue is still verymuch overshadowed by GSM and UMTS proves that theincumbent vendors Ericsson, NSN and Alcatel-Lucent still It would be prudent for the Chinese authorities to licensehave a strong position in the market. TD-LTE sooner rather than later. Not only would operators such as China Mobile, China Telecom and China Unicom,China’s FTTH market will NOT be the biggest in Asia! be able to introduce innovative 4G services, but also, having a 1.3 billion domestic market backing TD-LTE, wouldChina is one of the largest broadband markets in the give China’s home grown telecoms vendors, Huawei, ZTEworld with more than 120 million subscribers in 2010. and others, a distinct leg up in the global 4G TD-LTEThe majority of Chinese broadband subscribers are on equipment market.DSL platform, followed by cable and fiber. In terms ofbroadband subscriber numbers, China is the biggest Having regional support behind GSM and WCDMAbroadband market in Asia. However, fiber broadband provided a substantial boost to European telecoms vendors,adoption in China is still behind other Asian countries Nokia (ex), Siemens (ex) and Alcatel (ex) (yes, they mergedsuch as Japan and South Korea. but they did not disappear).© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 10including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  11. 11. It is likely the Chinese authorities would like to see a bit an issue. An influential factor that is keeping back operatorsmore success from the current mobile operators with is the CAPEX investment required to switch all of theirtheir current 3G services – especially China Mobile. TD- networks to one Carrier Ethernet backhaul network. TheirSCDMA is the domestically developed 3G technology. At current backhaul, although not 100% cost-bit efficient, isthe end of December 2009, there were five million TD- doing the job.SCDMA subscribers. Right now the scorecard says, “Coulddo better.” Even if carriers use pseudowires for their TDM/SDH networks, they don’t want to run the risk of investingCarrier Ethernet for backhaul will NOT see a substantial resources, placing their 2G and 3G networks on Carrierboom in 2011, and legacy backhaul won’t completely Ethernet, and having to bear with a transitional perioddisappear. of adjustments. This is, in other words, the “if it ain’t broken, don’t fix it” mentality. They would rather haveBelief in a 2011 boom for Carrier Ethernet rides the these on legacy backhaul which has been tried and tested“LTE hype” and “4G hype” wave. That is, the idea that 4G over the past 2+ decades, even though advancements innetworks will be begin to ramp up next year in 2011. Many Carrier Ethernet have proven it to be a reliable backhaulwould like you to believe that Carrier Ethernet as well will method which has a lower cost per bit.become massively adopted and become fully incorporatedinto mobile networks as a result. RFID tagging of retail items, e-ID,Although there will be a boost to Carrier Ethernet backhaul and contactless smartnext year, it will be curbed by several factors. Yes, there will card programs willbe LTE and WiMAX deployments, and they will need NOT be challengedCarrier Ethernet backhaul as they are all-IP networks. But by “mounting”the networks won’t be deployed on a large scale, and many privacy and securityother countries are only planning 4G or even 3G networks concerns.next year. While the privacy andThose carriers that do adopt LTE will most likely relegate security discussionCarrier Ethernet for LTE only to their initial LTE markets, is real, most of theas opposed to unifying all of their 2G and 3G networks claims are not.on Carrier Ethernet. Although Ethernet will reduce thecarriers’ cost per bit regardless of the mobile standard in Since ABI Research initiated its RFID marketuse, carriers feel there is a risk in adopting Ethernet for coverage, we can comfortably say the industry has madeunifying all of their backhaul on one type of network. They tremendous progress on a number of fronts, includingwould rather have each generational standard backhauled improved performance, lower costs, total solutionseparately to avoid a problem in one backhaul network development, increased user adoption, and much more.spoiling and affecting the rest, which in turn would affect There is an ample evidence to support these claims.customer quality of service. However, there is one area where little advancement has taken place: combating continued misinformationThere’s another myth: that lack of proper synchronization about RFID and NFC technology’s capabilities, uses,is what is keeping the migration towards Carrier Ethernet and limitations. We believe that the industry mustfrom becoming widespread in 2011. more forcefully address the potential damage of this misinformation.Synchronization techniques to improve legacy protocolsover Carrier Ethernet have had a lot of advancements and The issue of misinformation about RFID and relatedupdates for different protocols. Different approaches from contactless technologies is exacerbated as the use of thenetwork element vendors have made synchronization less of Internet grows, especially via social media programs.© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 11including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  12. 12. Hackers looking to shine a spotlight on RFID and don’t want to sit in the living room with you), you are theprivacy and security challenges related to contactless King or Queen of your home, and have the right to use thepayment or e-passports/e-ID often tout their living room TV to watch Walking Dead (AMC). Oh. Yourunsubstantiated and unverified claims on the Internet Comcast Xfinity subscription will let you watch premiumvia a blog or YouTube posting, capturing immediate video on demand (TV Everywhere) content on your iPad,attention. This is often followed by mass media coverage but not your Google TV? Give it a couple of months. Thoseof the hacking episode. big, bad networks want to keep you paying your cable bill (it provides 50% of their paycheck) – and cable companies mayUnfortunately, little coverage is given to the physics/ start longing for the day they can stop investing in a largephysical limitations of RF-based technologies and the capital expenditure – that set-top box under your TV.database correlation hurdles that nefarious characters needto overcome. It is generally conceded that most consumers That’s it, then. We hope you’ve enjoyed our assessmentdo not have a problem with the use of RFID, especially of what’s not going to happen in 2011. Along the way, ofin the retail space, if they understand that the tag can be course, these forecasts have hinted at what we may wellremoved or disabled. And, e-ID, contactless smart card and expect in the coming year. As developments take shape, ABINFC programs and rollouts continue without much public Research’s analysts will continue to provide unbiased, in-protest. We believe, however, that continued education of the depth coverage and interpretation. Meanwhile, the authorspublic, end users such as retailers, and key political decision of this paper join the rest of ABI Research’s analysts andmakers is needed on the security and privacy aspects of staff in wishing you all a happy and prosperous new year.RFID, smart card and NFC technology in 2011.Google TV is NOT dead on arrival, and yes, it willlive past 2011.The naysayers have it right that Google TV is still in betaand that, despite Google’s best attempts to reach out to(brownnose) the powers that be at the networks, Googlehas failed to provide PC-levels of content on the GoogleTV platform. D’uh! We are dealing with television networkssitting on big cash-cows (cable networks) and afraid of givingcustomers choices. For several years they have blocked everyattempt to liberate content to the TV.However, those naysayers are comparing Google TVto a PC, not to a TV. Compared to other connected TVplatforms, Google TV offers search (not refined enough yet)and will open a big middle-east style bazaar of an app storeearly next year. Search doesn’t organize everything the wayyou’d like? There’s an App for That. And why are Samsung,Vizio and Toshiba so eager to join Sony and Logitech atthe party? Open-source Google TV will allow them to cuttheir software teams while still offering great features. Nowif only it worked on a cheaper ARM processor. Oh yeah: itwill.While your kids might get stuck watching The VampireDiaries (CW) in their bedroom on an iPad (because they© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 12including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
  13. 13. Contributors:David Alexander Principal Analyst, AutomotiveJason Blackwell Practice Director, Digital HomeCelia Bo Industry Analyst, Wireless & SemiconductorDominique Bonte Practice Director, Telematics & NavigationStuart Carlaw Chief Research Officer Published 4Q 2010 ©2010 ABI ResearchJonathan Collins Principal Analyst, M2M 249 South Street Oyster Bay, NY 11771 USAPatrick Connolly Senior Analyst, Telematics & Tel: +1 516-624-2500 Navigation Fax: +1 516-624-2501 http://www.abiresearch.com/analystinquiry.jspFei Feng Seet Research AssociateLarry Fisher Research Director, NextGen ResearchVictoria Fodale Senior Analyst, Mobile Devices ALL RIGHTS RESERVED. No part of this document may be reproduced,recorded,photocopied,Michael Inouye Industry Analyst, Digital Home entered into a spreadsheet or information storageAditya Kaul Practice Director, Mobile Networks and/or retrieval system of any kind by any means, electronic, mechanical, or otherwise without theMichael Liard Research Director, AutoID & expressed written permission of the publisher. Smart Cards Exceptions: Government data and other dataSam Lucero Practice Director, M2M Connectivity obtained from public sources found in this report are not protected by copyright or intellectual propertyKhin Sandi Lynn Research Associate claims. The owners of this data may or may not beMichael Morgan Senior Analyst, Mobile Devices so noted where this data appears.Jeff Orr Principal Analyst, Mobile Devices Electronic intellectual property licenses are availableXavier Ortiz Research Analyst, Mobile Networks for site use. Please call ABI Research to find out about a site license.Sam Rosen Senior Analyst, Digital HomeJake Saunders Vice President of ForecastingPhilip Solis Research Director, Mobile NetworksNeil Strother Practice Director, Mobile Marketing Strategies and Mobile ServicesLance Wilson Research Director, Mobile Networks© 2010 ABI Research • www.abiresearch.comThe material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee page 13including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.