Knowledge. Passion. Innovation.
VisionMobile Research
Mobile Megatrends 2009

Knowledge. Passion. Innovation.
Mobile Megatrends 2009
Andreas Constantinou, Ph.D.
Research Director,
VisionMobile
twitter: @andreascon
Last updated: 2 June 2009 licensed under a Creative Commons Attribution 3.0 license.

Mobile Megatrends
Eight Centres of Gravity: the New Rules of Mobile.
Market Gravity: The Rise and Fall of Market Value. The
Software Industry is Consolidating. Mapping Business
Model Innovation: Value Quadrants. Open is the New
Closed. The Mobile Application Store Phenomenon.
NaaS: Network as a Service. Mobile Service Analytics:
the Most Underhyped Opportunity.

VisionMobile
Research Reports
selected analyst reports
On-Device Portals: The New Age of MDM Case Study: Five Defining Traits
Beyond WAP Handset Motorola of Open Source
(ARCchart) Customisation: (Ovum) (Informa)
2006-2011
(ARCchart)
High-Capacity SIMs Mobile Operating Firmware OTA: GPLv2 vs GPLv3
(Informa) Systems: The New From Hype to White Paper
Generation Market Reality
(ARCchart)
Mobile Software Activating the Idle Open Source in Mobile
Management Screen: Uncharted Mobile: 2007-2012 Megatrends
Report Territory (Informa) 2008
(Informa)

VisionMobile
Market-How Maps
Mobile Industry Atlas The 100 million club
:a visual map of who's who in the mobile : the watchlist of software companies whose
handset industry, showcasing 800+ leading products have been embedded on more than
companies across 47 market sectors. 100 million cellular handsets

VisionMobile
Advisory services
selected clients

Knowledge. Passion. Innovation.
Mobile Megatrends 2009

1 Eight Centres of Gravity: consolidation of power

1 Eight Centres of Gravity: consolidation of power
The industry is moving again into a vertically integrated structure
From the vertically integrated devices 20 years ago, to the horizontal enabler era of ODMs and OSes,
and again into a vertical integration of hardware + software + services with Nokia, Google et al
start

1 Eight Centres of Gravity: consolidation of power
Google, LiMo, Nokia, Qualcomm, Apple, Microsoft, Adobe, Intel
are building vertically integrated solutions and related ecosystems
in effect: Centres of Gravity
ecosystem players
vertical solution

1 Eight Centres of Gravity: consolidation of power
Starting from software or hardware, and building upwards
..
..the value wars are moving up the stack!

1 Eight Centres of Gravity: consolidation of power

1 Eight Centres of Gravity: consolidation of power
Outlook:
- RIM aggressively moving into forming a centre of gravity
- LiMo’s future is uncertain: LiMo-compliance only applies
to circa 1% of the software stack
- How succesful will be Adobe’s transition of Flash Lite into Flash 10
through the Open Screen Project?
- Can Sony Ericsson elevate Capuchin from a toolkit to a platform?
- Will Nokia divorce its Internet and manufacturing personae?
- Plus: networks are now moving into horizontal structure; via
outsourced IT operations, outsourced customer operations (see
MVNO) and outsourced sub-brands (see Blyk, Out There Media)

2 Market gravity: the rise and fall of market value

2 Market gravity: the rise and fall of market value
Every market sector follows a downwards path;
As if pulled by a gravity, it goes through 3 stages:
novelty
network
as a service
- Novelty: the point when a novel product
spectrum
scarcity
is introduced, but demand is scarce.
market
formation
- Differentiation: market is formed and
voice ring-back
differentiation
products become a point of differentiation services tones
- Utility: when the products in the market
MVNOs
have limited sale value, but have become essential
commodities. ringtones
location
services
Gravity accelerators/decelerators
value
sideloading
For every market there are factors or events causing
Latitude
line
Google
iTunes`
utility
its gravity to accelerate or decelerate (e.g. see what
Google Latitude has done for MNO location services)

2 Market gravity: the rise and fall of market value
Device technologies Network services
novelty
network
as a service
mobile haptics
spectrum
service
scarcity
analytics
market mobile
formation application
billing
stores widgets
voice ring-back access
differentiation
touch- services tones
screens
synchroni-
MVNOs
application sation
iPhone
environments
Active
Idle multimedia photo
Screen
Flash
codecs ringtones sharing
Lite
Java location
virtual services
machines
value
sideloading
browsers core on-device
Latitude
line
Google
iTunes`
Dalvik
portals
utility
operating
systems
WebKit
Linux

3 The software industry is consolidating

3 The software industry is consolidating
Operating systems for smartphones are now reduced to two choices:
(smartphone OSes are strategically important to OEMs due to high margins of smartphones)
1. S60: now with low cost of ownership and UIQ, MOAP out of the way
Pros: Backed by Nokia, SEMC, Samsung, LG, but not Motorola. Mature and operator compliant
Cons: Nokia’s dominance of package ownership and lack of UI differentiation may alienate OEMs
2. Android: advanced architecture, but not catering to OEM needs
Pros: Backed by HTC, SEMC, Samsung, LG, Huawei. Dell, Garmin, Fujitsu, China Mobile, Vodafone, O2.
Pros: designed from the ground up for 3rd party developers; fastest in developing and debugging apps
Cons: not designed for 2nd parties (OEM partners); variant creation is very resource intensive
Cons: software is not pre-integrated with telephony stack and needs Google engineering resource;
Our prediction: 5 Android devices will launch within 2009.

3 The software industry is consolidating
..while other smartphone OSes have been sidelined:
Linux is no longer the panacea it was considered to be in 2006
- Android’s flexibility and short time-to-market has pre-empted Linux’s openness
- ALP, Azingo are still in development, with phones expected in early 2010.
- LiMo has been a diversion for ALP, Azingo and Myriad (Purple Labs), diverting focus away from
product development, into operator customisations and business development.
- The discontinuation of Motorola’s L-J and the decline in the Japan smartphone market has meant
lower volumes from key Linux champions
- Linux is now meaningful only as an OS-supporting base
Windows Mobile has niched itself into a corner
- OEMs use Windows Mobile for enterprise phones or tactical wins (e.g. HTC X1)
- ODMs do not have the money or expertise to invest in consumer-oriented industrial designs
- The first consumer-oriented version of the OS, Windows Mobile 7, has been delayed to 2010
RIM’s Java platform and OSX growing strong but not licensable

3 The software industry is consolidating
Mobile Linux landscape: from 10 vendors in 2007 to 5 in 2009
- Linux for mid-end: Myriad (ex Purple Labs)
now including Openwave client business and the Sagem software business
- Linux for smartphones: Azingo and Access Linux Platform
two acquisitions later, ALP is suffering from permanent beta status - since PalmOS 6 in 2004
- Linux for MIDs: Moblin (now with OpenedHand) and Ubuntu Mobile
Missing in action: MontaVista, A la Mobile, OpenMoko (no consumer devices).
- Plus system integrators: WindRiver (now with Mizi know-how), Teleca, Movial
But Linux market share is in decline
Linux only 5.1% of the smartphone market in 3Q08, compared to 6% in 2006 (data: Canalys)

3
The software industry is consolidating
Four application environments set to dominate:
- WebKit: de facto standard for web content and service delivery
to hit 100m shipments by 2H09 due to its integration with S40, S60, OSX and Android.
Most OEMs are expected to adopt WebKit as compliant, customisable and low cost
- Flash Lite: now at 50% share of devices sold, but migrating to Flash 10 + OSP
Adobe suffered similar setbacks as Java; ubiquity, but fragmented runtime (to be addressed with Flash 10)
- Qt: Nokia’s foundation for deploying Ovi services and its branded core apps
on a single substrate across S40, S60, PC and other OEM handsets
- Java ME slowly moving towards MIDP3
Java will stay around due to 80% penetration across
sales base and established Java applications market.
But OEMs will push more advanced Java VMs.
source: Nokia

4 The Evolution of Revenue Models

4 Value Quadrants: mapping revenue model evolution
Services
value created
in the cloud
theWHEN
of value creation
pre-launch post-launch
value created during value created
design, development and in channel, at point of sale
production and during in-life use
the WHERE
of value creation
Device
value created
on the handset

4 Value Quadrants: mapping revenue model evolution
Value Services Value
value created
Design and each quadrant services, apps and
in the cloud
development of delivers content delivery
software, hardware distinct Value
and services
pre-launch post-launch
value created during value created
design, development and in channel, at point of sale
production and during in-life use
Value Value
industrial design monitoring
hardware activation
embedded software Device configuration
software & hardware IP management
value created
on the handset

4 Value Quadrants: mapping revenue model evolution
Value Services Value
value created application
Design and services, apps and
in the cloud developers
development of content delivery
software, hardware
network
and services
operators
service deliv. handset
platforms OEMs
..delivered by
distinct
development advertisers content
players tools vendors aggregators
pre-launch post-launch
value created during value created
design, development and handset ODMs and handset in channel, at point of sale
production OEMs EMSs OEMs and during in-life use
industrial embedded service
design houses s/w vendors analytics
hardware SIM card
Value vendors manufacturers Value
industrial design monitoring
hardware activation
embedded software Device configuration
software & hardware IP management
value created
on the handset

4 Value Quadrants: mapping revenue model evolution
Value Revenue models Services Value Revenue models
value created application
Design and per developer seat services, apps and per active user,
in the cloud developers
development of per site content delivery per impression
software, hardware per CPU .. and using per click
network
and services distinct per transaction
operators
revenue models subscription
risk-sharing
service deliv. handset
platforms OEMs
development advertisers content
tools vendors aggregators
pre-launch post-launch
value created during value created
design, development and handset ODMs and handset in channel, at point of sale
production OEMs EMSs OEMs and during in-life use
industrial embedded service
design houses s/w vendors analytics
hardware SIM card
Value Revenue models vendors manufacturers Value Revenue models
industrial design per unit monitoring per active user
hardware per platform activation per unit
embedded software per device model configuration per activation
per year
Device
IPR management per app install
value created
on the handset

4 Value Quadrants: mapping revenue model evolution
Revenue models Services Revenue models
value created application
per developer seat .. confirming per active user,
in the cloud developers
per site recent trends per impression
per CPU per click
network
per transaction
operators
subscription
risk-sharing
service deliv. handset
platforms OEMs
development advertisers content
tools vendors aggregators
pre-launch post-launch
value created during value created
design, development and handset ODMs and handset in channel, at point of sale
production OEMs EMSs OEMs and during in-life use
industrial embedded service
design houses s/w vendors analytics .. uncovering
new players
hardware SIM card
Revenue models vendors manufacturers Revenue models
per unit per active user
per platform per unit
per device model per activation
per year
Device .. and innovative
per app install
value created revenue models
on the handset

4 Value Quadrants: mapping revenue model evolution
Revenue models Services Revenue models
value created
per developer seat per active user,
in the cloud
per site per impression
per CPU per click
per transaction
subscription
risk-sharing
pre-launch post-launch
value created during value created
design, development and in channel, at point of sale
production .. and revealing and during in-life use
software
the evolution of
monetisation
value creation
in mobile
Revenue models Revenue models
per unit per active user
per platform per unit
patents & IPR
per device model per activation
Device
per app install
value created
on the handset

5 Open is the new closed

5 Open is the new closed
Open source is moving from early adoption to maturity across all handset
OEMs
Multiple major mobile open source efforts: Android, Symbian/S60, LiMo, Qt, WebKit, Java ME,
MIDP3, AOL OMP, Qt, GTK, Eclipse IDE,..
Key benefits:
- Shares cost and risk of developing software building blocks
- Speeds up innovation via third party contributions
Key risks:
- Lack of education and established best practices in mobile OSS

5 Open is the new closed
understanding licenses vs governance models
license type
Proprietary
community license
dual license
(commercial + copyleft)
paid-for
Funambol Rhomobile OKL4 phoneME
strong copyleft
(GPL)
Linux kernel
hobbyists
weak copyleft
GTK+ (LGPL, MPL, EPL, ..)
platform Foundation Foundation WebKit Qt
GTK+
Participating developers
non-copyleft
(APL, others)
OMP Moto Android
MIDP3
permissive
(BSD, MIT, ..)
opinion leaders moderator based members only single company
governance model

5 Open is the new closed
which licenses and governance models are commonly used?
license type
Proprietary
community license
dual license
(commercial + copyleft)
paid-for
Funambol Rhomobile OKL4 phoneME
strong copyleft
(GPL)
Linux kernel
hobbyists
similar license,
varied governance weak copyleft
GTK+ (LGPL, MPL, EPL, ..)
platform Foundation Foundation WebKit Qt
GTK+
Participating developers
non-copyleft
(APL, others)
OMP Moto Android
MIDP3
permissive
(BSD, MIT, ..)
opinion leaders moderator based members only single company
governance model

5 Open is the new closed
While:
Licenses are standardised, converged and well understood
4 licenses used most often in mobile projects (LGPL, EPL, APL, BSD)
Governance models are proprietary, diverging and poorly understood
And while:
- Licenses are about source control
source code access, modification, contribution and distribution
- Governance is about product control
product modification, forking, roadmap, IPR, membership fees..

5 Open is the new closed
How ‘open’ is an open source project?
Some questions to ask:
- Is the source code publically available or to members only?
- Are code check-ins publically accessible ?
- Are the minutes from meetings publically availably?
- Are there any fees or contractual commitments (NDAs, etc) required for members?
- Who has access to check-in code? (and what is the process/medium for check-ins)
- Who has the authority to release code and binaries (how is the release schedule determined)?
- Who is entitled to branch source code ?
- How is the roadmap formed ? What is the process and who has voting rights ?
- Are IP rights (patents, copyrights, etc) of contributions maintained or automatically transferred?
- Do contributors have to transfer patents contained in the contributions ?
- Are there any safe harbour provisions for contributors to the source code ?

5 Open is the new closed
Governance models allow OSS use while maintaining control:
- LiMo Foundation: open by inheritance
Open because its members’ handsets are built on top of the Linux kernel
Zero community contributions in two years since foundation (hired community manager in 4Q08)
Only 40% of R1 code is OSS, rest is proprietary
- Symbian Foundation: open source capitalism
Open to compete with Android, marginalise Windows Mobile and make UIQ/MOAP irrelevant
Open so as to reduce barriers to innovation, while lowering costs and risk of software development
Nokia will have most influence over roadmap due to gravity of contributions: open source capitalism
- Android: as open as Google wants it to be
Members can access code, but Google controls commits and product management
Commercial agreements allow Google to bundle apps and services on Android handsets

6 The Mobile Application Store Craze

6 The Mobile Application Store Craze
The industry has been trying to open the mobile apps market for many years
2002: open route to technology (SDKs)
the plan: open OSes and Java will enable 3rd party applications and revenue
The reality: complex APIs, high porting costs, poor tools, poor discoverability, poor provisioning
The result; Symbian (10,000 apps), BREW (10,000 apps), Java ME (45,000 apps)
2008+: open route to market
the plan: help developers deploy and make money, help users discover
the reality: Apple’s app store the first to get the recipe right
the result: 35,000 apps within 10 months, circa $500M revenues/year for Apple app store
the impact: ALL major handset OEMs, OS vendors and operators want their own mobile app store.

6 The history of Mobile Application Stores
Qualcomm intro’d mobile app stores (MAS), but Apple perfected the recipe.
BREW Mobile Shop Apple App Store Android Market RIM App Center Palm Software Store Ovi Store
2002 2008 2009+
2009+: mobile application stores everywhere!
OEMs: Samsung Innovator, MTK App Stores, Symbian, Microsoft MarketPlace, Adobe AppZone
Operators: Orange App Shop, Verizon Appzone, Sprint OnDemand, China Mobile, T-Mobile, ..
White label: Handango, Mobango, GetJar, Everypoint, Ideaworks 3D, Tanla, Motricity, Cellmania,
Handmark, Javaground, OnMobile, Comverse, Amdocs, Qualcomm Plaza, Bango App Seller

6 Ovi Store update
- Applications: native (Symbian/S60) + Java + widgets + Flash Lite apps
- Content: *premium only* ringtones, wallpapers, videos, and themes
- Self publish process (needs taxpayer ID + copyright declaration). 50 EUR reg. fee
- Billing will be via credit card AND premium SMS (8 countries initially)
- Revenue share: developers will get 70% revenue share (varies with MNO billing).
- Availability: 200 million handsets by end 2009 (downloadable, not embedded)
- Migration: WidSets discontinued to become Ovi Store runtime on S40.
- Advertising: Spotlight will allow ad placements (time or CPM-based)
- Features: recommendations based on friend picks and location
(key to breaking promotion barriers of Apple’s top-25 lists and avoiding app price decline)

6 The key success factors of the MAS recipe (1/2)

6 The key success factors of the MAS recipe (2/2)

6 The Mobile Application Store Phenomenon
The Apple App Store has also disintermediated the mobile apps value chain.
Developer Publisher Aggregator Operator End user
Before: (20%) (20%) (20%) (40%)
Developer Apple End user
After: (70%) (30%)
..and is stirring a rethink of the mobile games business:
“The traditional mobile-game business model is not bearing much fruit. Console-game publishers
Eidos, Vivendi and Sony and mobile content aggregator Player X have all closed their mobile-
game-publishing operations; Glu, the third-largest mobile game publisher in terms of revenue has
seen is share price collapse; and many companies have gone out of business, including publisher
Telcogames and Jamba-owned developer Ojom.” .. “Fishlabs reports that it makes more money
each day selling games at just €0.99 (US$1.30) each to iPhone users than it did in a month from
all operator portals put together, where it sold them for the much higher price of €5 a game”.
Source: Informa Mobile Media magazine, February 2009.

6 The Mobile Application Store Phenomenon
Outlook:
- Successful MAS solutions will require all five key success factors
- Supply of MAS ingredients is in abundance
Marketplace and content catalogues (e.g. Cellmania, Handango, GetJar), billing (e.g. Tanla, Bango, Qpass),
distribution and retailing (e.g. July Systems, Motricity, Jamba, Handmark), on-device storefronts (e.g.
mPortal, SurfKitchen, Everypoint), provisioning (e.g. InnoPath, Red Bend, mFormation).
- OEM-led mobile app stores will be most successful
OEMs control provisioning, on-device discovery and have access to global distribution. Mobile app stores
will be a key post-sales revenue source for OEMs.
- Operators will struggle to build and will buy or white label
Operators/carriers lack of control over MAS key success factors and have limited s/w know-how.
They will end up buying in or licensing MAS solutions
Our prediction is that the Joint Innovation Lab will be short-lived.

7 NaaS: The Network as a Service

7 Network as a Service
Mobile networks have traditionally been closed and slow to innovate
- internal-only product innovation has been extremely slow
- limited to mass-market, reach-all-handset services
- limited to a handful of 2nd parties, on a need-to basis only
- very complex APIs (IMS, Parlay, proprietary SDPs)
But operators/carriers are finally realising that there are major revenues
to be made by becoming a ‘service platform’ or a WebCo
Network as a Service = reselling API access to 3rd party services
Plus allows operators/carriers to empower a long-tail of applications that better cater to the long tail
of consumer preferences  more choice = more users, less churn.

7 Network as a Service
Networks have a breadth of services and consumer intelligence to expose
e.g. click-to-call, billing access, send SMS/MMS/email, get location, IVR services, get device capabilities,
access to voicemail, user authentication, access to user profile/calendar/contacts/favourites/photos.
Early NaaS providers:
- Orange Partner: 28 APIs, 4,000 active users most APIs are alpha and only in France
- Vodafone Betavine: 5 APIs, 13,000+ users, 200+ applications rev share on apps
- BT Web21C SDK: 6 APIs, 9,000+ developers provided by Ribbit (now BT)
- O2 Litmus: 3 APIs initial APIs are free, plan to charge for SMS/MMS APIs
- More joining Telenor Playground, Sprint Mobility Framework, Deutsche Telecom Develop Portal
Standardisation efforts
- GSMA One API, Telefonica WIMS 2.0, Open Movilforum

7 Network as a Service
NaaS services are late to market and slow to mature:
- 3 years behind web companies (e.g. Amazon affiliates, Google AdSense)
- 5 years behind alternatives (e.g. aggregators for SMS, billing, location)
- High charges for API access (e.g. Orange €500 activation charge for Contact Everyone API).
- Lack of intra-country and inter-country reach (APIs limited to subscribers reached by
the operator within each country. There is also a lack of consistency across regional implementations).
- Lack of carrier-grade reliability (e.g. complaints of downtime on BT’s SMS API)
- No direct route to market for developers (developer programs are often run by R&D
teams or otherwise lack direct access to commercial deployment or bundling deals)
- Limited operator experience in working with developers unlike web companies

7 Network as a Service
Outlook:
Next-gen SDPs and NEPs will run NaaS services on behalf of operators.
Companies to watch:
Aepona ($45M funding, major telco customers in US, Europe and blueprint for GSMA OneAPI)
Ribbit (NaaS pioneer, Web 2.0/Internet background, acquired by BT)
see also:
www.slideshare.net/aubs/open-apis-a-telcos-perspective,
www.gsmworld.com/accessentry

8 Service analytics: the most underhyped opportunity

8 Mobile service analytics
Mobile is the most data rich industry; yet we are still in the dark ages
- Difficult to assess devices, services and the user experience
due to a scarcity of widely deployed measurement tools and the complexity of extracting intelligence
- Yet the mobile has infinitely more information about us than the web
more information (voice, text, location, presence, mood, movement,..), more implicit (easier to extract),
more often available, more closely tracking our behaviour  more valuable!
- and the analytics applications are phenomenal
customer profiling and targeting, customer segmentation and value analysis, campaign management, ad
inventory management, user experience analysis, network planning, handset & service performance
analysis, revenue assurance, ..
- Did you say privacy? it will be traded off for new capabilities
especially for social networking - see Facebook

8 Mobile service analytics
Mobile service analytics is an under-the-radar market. Early suppliers:
The value is across
- gathering & storing metrics through device or network probes
- aggregating across domains e.g. user segments, location, handset, services, etc
- extracting intelligence information depending on the application
..and will enable many new revenue sources and revenue models

Thank you !
Further reading:
Industry Atlas
A visual who’s who of the mobile industry
www.visionmobile.com/maps
Mobile Open Source: Training Course
covering economics, licensing, governance models, communities,
operating systems, standards, case studies and strategies.
www.visionmobile.com/workshops