Prediction #1 – HSPA: “Mobile broadband for the masses”
2010 is the year when the HSPA device market will go ballistic. Fierce competition will screw down prices on both HSPA chipsets and devices. These low prices will in turn lead to a rapid increase in HSPA uptake among consumers, with the result that there will be 400 million live HSPA connections worldwide by the end of 2010.
At the heart of this growth will be Chinese operator China Unicom, whose nationwide HSPA network is already the biggest anywhere in the world. And every device company will need to have an established presence in China if it is to capitalize on the massive mobile broadband uptake that’s expected there in 2010.
In addition, LTE will launch in 2010 and, despite being a new technology, will perform surprisingly well. Spectrum requirements will remain a concern, which may result in refarming of the 900 and 1800 MHz bands. However, for the time being, the outlook for LTE’s future is sunny.
Prediction #2 – Vendor M&A: “No country for old men”
For the last ten years, the mobile infrastructure market has been highly competitive, with Ericsson and Huawei emerging as the leading heavyweights in the sector. In 2010, they will be joined by Nokia Siemens Networks as, under its new management team, it pursues a new, more aggressive pricing strategy.
In this market of heightened competition, the short-term winners will be mobile operators, who will be able to swap out and upgrade to brand new networks (including LTE) at a previously unheard-of low cost.
But this buyers market cannot last beyond a year. The sharp fall in equipment prices will not sustain multiple vendors: as a result, the number of infrastructure companies will shrink to three during 2010. Expect one of Alcatel-Lucent, Nokia Siemens Networks, or ZTE – or a combination of two, perhaps – to join Ericsson and Huawei at the global top table.
Prediction #3 - Mobile operator services: “Shoemaker, stick to your last!”
Despite the economic downturn, mobile operators continue to record positive results. However, there is a cloud on the horizon – in the shape of slowing future growth. In fact, if we remove emerging market assets from the equation for global operator groups, we can see that revenue generated from non-voice and messaging data services has remained in the low single digit range for the last ten years or so.
Now, as mobile data finally takes off thanks to mobile broadband and mass-market availability of smartphones, operators are at risk of losing revenue and ownership of the subscriber to competing over-the-top providers from the fixed Internet world.
In 2010, expect more of the same – and worse, as rival service providers target operators’ core revenues from voice and messaging with their own voice and messaging apps and services. Those operators who acknowledge this competition and choose to focus their efforts, not on their own in-house services but instead on coverage, quality and general operational excellence of their network, will emerge as winners in the new mobile services value chain.
Prediction #4 – Embedded devices: “Not even the sky is the limit”
The success in 2009 of the Amazon Kindle e-reader in North America brought into sharp focus the potentially huge market for connected devices, i.e.: hardware with wireless data connectivity pre-installed.
Expect 2010 to be the year for the hitherto-untapped connected device market to skyrocket. The networks are ready, the price of mobile chipsets continues to drop radically – and mobile operators also now understand that this market requires a different approach and a different business model than their traditional one.
Near-ubiquitous mobile broadband coverage means that anything which can be connected, will be connected. And the growth of the connected device market will only accelerate, so that by 2020 it will eclipse the traditional handset and subscription market in connections (although not in revenue).
Prediction #5 – Smartphones and applications: “What North America loses on the swings, it gains on the roundabouts”
2010 is set to be the year that North American software and hardware players steal both momentum and handset market share at the expense of the European incumbents. As the mobile industry shifts to an increasingly data-focused business model, US companies can draw upon their track record of success with the Internet, and leverage their strengths in the web, software and developer communities to dominate the mobile date space in the same way that they dominated the original fixed Internet.
We’re already seeing the likes of European companies like Nokia and Sony Ericsson losing market share to the likes of Google, Apple and RIM – both in the device and OS categories. One-time market-leading European heavyweights have seemingly lost their ability to innovate. In contrast, their American rivals are at ease with copying the Internet development model based on innovation and entrepreneurial spirit, and are forging ahead with new products and ideas.
In 2010, operators and handset makers alike in Europe will need to address this fundamental shift in power and influence to stem their losses. Nevertheless, expect North American device and Software vendors to dominate the smartphone and related software space for 2010 and beyond.