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Some Reality into Apps Store Hysteria on the Markets and Opportunities in Mobile

Lets have some realism in the apps stores hysteria

This industry is so prone to hype and hysteria. Right now the hot buzz in mobile is "apps stores", and every handset maker, smartphone operating system provider and major mobile operator/carrier is eager to launch their own apps stores, while the tech-oriented press and bloggers all obsess about the traffic and downloads generated by Apple's iPhone Apps Store. I want to bring some voice of reason to this hysteria. And yes, this is one of my trademark long and detailed blog articles, so get your coffee before you start.

So, to start with - this blog story is not about me being 'against' apps stores, or 'against Apple iPhone' for that manner. Please do not misunderstand me. I want to inject realism into what I see as hysteria right now, totally unjustified hysteria and hype, that is leading many executives to make costly mistakes, in mis-understanding the overall picture of the mobile services and data opportunity.

APP STORES ARE GREAT

So lets be very plain about this. The app store innovation is a great new vibrant economic opportunity - for those who make applications. The PC market has been stagnant for many years, so there is not a vibrant new applications market for the PC customer base of about a billion+ devices. Where PCs now go, in many parts of the Developing World, the market is symptomized by illegal copies of software, so application developers do not see much economic opportunity there, where most copies of apps are pirated.

So, when Apple caused all the big media attention launching its Apps Store in 2008, it also attracted a big interest in providing apps to this platform. There are countless big successes and very many innovative mobile applications that have been deployed on the iPhone. It has been very good for the mobile industry, and it has been a powerful incentive for all those PC-oriented developers to move over to mobile, to join the 'mobile revolution' so to speak. Every week we hear of cool new iPhone apps, just today I Twittered about Brittney Spears's fan club app for the iPhone which is very clever. And what attention the Apple iPhone Apps Store has raised, has also helped other players in the industry to improve their offerings in an 'eco-system' for developers, with Nokia focusing on the Ovi store, and all smartphone platforms and makers such as RIM Blackberry, Windows Mobile, Google Android etc providing now similar apps stores, as well as the other handset makers, and big operators/carriers. This is all good.

The smartphone was a very cumbersome and unfriendly development environment for application developers before the iPhone Apps Store. Also payments were a problem, the eco-system for developers very immature. Today there is a clear race to have the best application developer environment and this competition is good for the industry - and for developers.

APPLE iPHONE APPS STORE IS WONDERFUL

So, what of the Apple iPhone Apps Store? It is wonderful - for the developer. I have heard from so many developers, who say that developing apps for the iPhone is by far the easiest of any smartphone, and the Apple iPhone Apps Store is by far the best environment to have your prospective customers find your apps, for you the developer to market your apps, and and for you the developer to collect money from your clients. It is currently the best-of-breed in its class. And it is helping set the standard for ever better apps stores and developer eco-systems by all others who offer apps for smartphones.

There are certain unique aspects to the iPhone Apps Store that give it (at least currently) incredible advantages - to the developer. Most of all, the iPhone through three phone models since 2007, and the iPod Touch, have the same form factor for its UI, same screen size and orientation, same inputs and outputs, etc. This is completely disasterous on any other platforms. On Symbian you can find 2 inch, 2.2 inch, 2.5 inch, 2.8 inch, 3 inch, 3.5 inch, 4 inch screens (and more). You can find screen formats of square screens, 4:3 aspect ratios, 16:9 modern TV aspect ratios, even letterbox (movie) screen aspect ratios etc. Portrait orientation or landscape or variable. Then there are differing pixel densities even for same size screens, and color richness etc etc etc. That was just a bit about the complexity of the screens. What of inputs, what of all the other technical parameters? Design for that complexity and cry...

APPS STORES ARE FRACTION OF SMARTPHONES

Now, lets go to reality. First, not every buyer of any smartphone - including iPhone - will install apps. There are users of the iPhone, who use it for its 'looks' rather than its abilities - it is a very sexy desirable looking phone. There are many countries where the Apps Store is not operational. So while the download numbers from the Apple iPhone Apps Store are enormous, this is not all users. It is a fraction - albeit probably far more than half of US iPhone users today, still only a fraction - of all iPhone users. Understand what I mean. If the total installed base of iPhones is 35 million, the download gigantic volume does not change the fact, that the total addressable user base of downloading iPhone users is by definition less than 35 million. Is it half, is it two thirds or one third, we are looking at a very small number globally.

And the iPhone Apps Store is quite a 'special case' and will not necessarily replicate at the same level in the rest of the world, across the rest of the smartphones. To start with, the original iPhone was very much an 'incomplete' smartphone. So what do I mean by that? I mean that most contemporary cameraphones in 2007 when the iPhone launched, with 2 megapixel or better cameras - did record video 'natively' out-of-the-box with the camera feature. But the iPhone camera only took still images, did not record video. But then, no problem - at the Apps Store you could download an application to your iPhone, and 'fix' this 'deficiency' by simply installing a video recording app to your iPhone.

One, this is a clever way to enchance your device. But it did mean, that for some uses of a phone, that most contemporary rivals like Nokia, Samsung, SonyEricsson etc included as standard, out-of-the-box, like video recording on the camera function, or say the QR Code/2D Barcode reader - Apple had left those functionalities off the shipping (early) iPhones and then users could go and download these from the Apps Store - often for free.

So some of Apple's smartphone application load traffic is not likely to be repeated by other smartphones, simply because for example the market leading Nokia Symbian phones would have these software elements pre-installed on their smartphones - like video recording for the camera feature. One could say there is 'artificial demand' only for Apple branded smartphones due to their 'stinginess' in pre-installing apps and features to the iPhone.

APPLE IS LUXURY BRAND FOR PHONES

Meanwhile, on Apple - the iPhone is a super-premium high cost smartphone. It is (currently) in the luxury price bracket. Just to be clear, for those readers who may not know of this - that US price tag of 200 dollars is an illusion - you are still buying a 600 dollar iPhone, only paying for it in installments over a 2 year payment plan. The iPhone 3GS is not a 200 dollar phone, it is a 600 dollar phone exactly like the Nokia N-97 or the Blackberry Bold, and even in the most wealthy markets on the planet, that is a super-premium luxury brand phone pricing, not a mass market phone. At that kind of pricing it will never be in the pockets of a majority of consumers in any market.

It does not mean its a bad phone - the iPhone 3GS is a very good phone, but it is as much a luxury product as a Jaguar or Mercedes Benz car, and will never have a mass market type of market share among all phones (or cars in my analogy). Far cheaper smartphones exist and will flood the market - Nokia has many smartphones in the 200 dollar price range.

Obviously it does mean, that the typical iPhone owner is very affluent, in any country, and is a very desirable type of customer for any brand for example for advertisers, and is a good candidate to buy other premium and luxury things (and well-designed things).

But please, for all that hype, do understand, at the iPhone Apps Store market potential, the way the iPhone is today, it is NOT a mass market phone. And don't be fooled into thinking that somehow Apple dramatically dropped its price from 600 dollars 'premium' pricing to 200 dollars 'mass market' pricing. That price drop was an illusion. The iPhone does cost 600 dollars and that is its value, and that places it squarely in the luxury phones category, super-premium cost phones.

It is NOT like the iPod which became a mass market music player, or the Apple branded PCs which have been mass market PCs. Don't be misled by the press headlines of Apple having 17% of smartphone market share. That is like saying Porsche has 17% of sports cars. The sports car segment in cars is still the luxury bracket. You need to look at all phones, not just follow Apple's PR spin to look at only smartphones.

The reality is that currently only 3% of Americans have an iPhone and if its price stays at around 600 dollars in real terms, it will never hit 10% of Americans or 2% of the world. That price level has to come down dramatically, for the Apps Store market to ever be a viable mass-market consumer channel.  There is nothing wrong with having a premium luxury product and selling goods (apps) in a premium luxury store - but that will not get you the mass audience. It cannot. 97% of all Americans do not own an iPhone. Most cannot afford the deal AT&T is forcing them to sign up to. no matter how much they may 'aspire' to own an iPhone. Many people want to own a Jaguar or Beemer or Benz or Cadillac then buy a Toyota or a Chevy. For American readers, the Apps Store is like having your product sold in Saks 5th Avenue stores only, not at K-Mart. You will make sales at the Apple Apps Store, but it is only a tiny niche of the addressable market of all mobile phone owners.

NOT ALL APPS DOWNLOADS ARE PAID APPS

Now, back to the Apple iPhone Apps Store. It has a lot of free content, and a lot of paid content. The early evidence suggests that the majority of apps downloaded are free apps. Now, that is not such a bad thing, even free apps have to be developed, so there usually is some sponsor or owner of that application concept who was willing to foot the bill. A lot of the free apps are adver-apps, and that is also a good concept. But do understand, that of the massive download volume we hear about, most is free and that should not be very surprising.

What of paid apps? Here the early evidence suggests the majority of paid apps is games. That is fine too, but then we are looking at a relatively narrow market of consumers who are willing to pay for videogaming. Again, don't think they'll buy your clever information news management application, if most Apple paid apps are games. Or then try to turn your idea into a game perhaps?

The biggest category of 'applications' by volume of titles at the Apple iPhone Apps Store used to be games, and just this month it shifted so that today the biggest category of 'apps' is ebooks. Yes, we do download them and save them to our device, but is that really 'an application' or are we now selling 'content' or 'titles' via the apps store? So the Apps Store is murphing into being a smartphone-oriented rival to Amazon bookseller and Kindle eBook reader? Pay attention to this shift, some of that revenue that is being generated is not any type of app, it is pure content (eBooks for example) not applications.

So - lets take a breather here. Apple's iPhone Apps Store is great, it has tons of apps and gets massive amounts of downloads. However, whether its a hundred million downloads or a billion downloads, the total accessable market did not grow whether apps were 100 million or a billion - its still only 35 million total iPhones out there globally, and total installed base of iPhone users is by definition less than that, as some iPhone users have upgraded and thus some of the newer iPhones were sold to those who already owned an older model.

Not all iPhone users will download apps. Those who do, will greatly prefer free apps. With free apps, there will be a disproportionate amount of downloads compared to apps that are actually used. Out of paid apps, most are games. Today, out of all items available at the Apps store, the largest category is eBooks - which are not even true applications. (Incidentially, I applaud this strategy by Apple, but just want this to be clear - lets not now fall into more hype and hysteria about it, if Apple manages to rival Amazon via the Apps Store and somehow equate that as an 'applications' opportunity. Mobile phone books are a far bigger opportunity sold directly to phones, without 'apps' and in Japan generate half a billion dollars of revenues already, sold directly from the mobile internet websites of Japanese booksellers or direct from m-books publisher sites)

It can well be said, that the iPhone (and iPod Touch) is the nearest rival to the Playstation Portable, as a pocketable gaming platform. And offering eBooks, it is turning the iPhone into a viable rival to the Kindle style of eBook readers, while making the Apps Store a rival to Amazon. As the total 'downloads' shifts from real apps to 'content' like eBooks, please do not be deluded into thinking just because it was sold by Apps Store, it is an application. That is Apple cannibalizing Kindle and Amazon sales, not creating a bigger market for any developers out there coding applications.

Does that mean that every title in the Apps Store is an app, no. Does it mean that there is something unique here for Apple. No. But yes recognize on the most hyped Apps Store, at Apple, not all iPhone users download apps, not all apps are paid-for content, and of paid content, not all are real apps. So far so good. This is Apple's best market, the USA  where the iPhone has 3% of American and under 1% of the rest of the world's phones.

OTHER APPS STORES

Ok, so Apple is a special case. What of the bigger smartphone platforms? Symbian has 10 times more smartphone handsets in use around the world. RIM's Blackberry has about twice the installed base of smartphones than the iPhone worldwide and is far the biggest smartphone platform by installed base specifically in the USA. And there is Windows Mobile, Google Android, Palm etc. Will their users download apps. Yes they will. But will they do so as much as Apple sees now in the Apps Store. I think not. Makes no difference how 'good' their Apps Stores and how many 'titles' they may have.

Why? Well, first the Apple is a very uniquely consumer-only focused smartphone platform. It is the least business/enterprise oriented smartphone platform. Compare it to Blackberry, which is predominantly a business/enterprise smartphone, which is currently breaking into the consumer smartphone space. So while the Blackberry does have a vast library of apps, they are mostly business/enterprise applications. These are sold through various business/enterprise solution providers and are not sold via any 'apps store' but rather they are installed by the IT departments of the enterprise/corporate customers who deploy Blackberries by the thounsands as employee-phones to mid-managers and executives. So if they have some app built to do say CRM system integration with the company's SAP based CRM solution - that is an application for a smartphone, it will be deployed to thousands of Blackberries at that corporate customer, but it will not equate to thousands of individual SAP apps 'bought via an Apps store' at the RIM apps store.

So for at least Symbian, RIM, Windows Mobile and Palm, a significant part of all apps that are truly sold to their smarphones - do not show up in any apps store statistics (Google's Android is still so new, we don't have a clear idea of their precise focus area).

The Apps Store measurement is a consumer focused opportunity and when we obsess about it, we ignore a huge already-well-established mobile applications opportunity for business/enterprise apps. Not sold via apps stores. Don't think, if for example RIM or Symbian/Nokia 'apps store' sales are not as impressive as Apple's that their 'total' apps opportunity isn't bigger. Blackberries and Nokia E-Series phones both have bigger installed bases among just business/enterprise customers worldwide - than the total installed base of Apple iPhones. And I'd suggest for practical purposes every single enterprise/corporate smartphone for large corporate customers has at least one 'application' installed for the business use - corporate email if nothing else. That is not your Hotmail or Gmail or Yahoo email client. A robust, secure corporate email solution, and its smartphone client. An application for a smartphone... Most likely business/enterprise smartphones have many apps, pre-installed by the IT department before the employee even gets to turn on his new Blackberry or E-Series.

EMPLOYEES OFTEN FORBIDDEN

Palm, Windows Mobile and Nokia's E-Series (Symbian) are typically strongly enterprise/business customer -oriented, so again, there often business/enterprise employee phone guidelines expressly prohibit the employee phone from being used for personal uses, ie installing Facebook etc and installing games and so forth. Out of all smartphones out there, Apple is singularly not successful in the enterprise/corporate space (had something like 2% of all US based iPhones with corporate customers according to their CTO earlier this year) so Apple does not have this 'hindrance' to its iPhone users coming to its apps store and 'freely' buying apps.

Now, all smartphone makers are rushing to capture the bigger consumer market (bigger than the enterprise/corporate market) and Nokia's N-Series is a good example of this strategy already years prior to the launch of the iPhone. But recognize, of the total installed base, the Symbian, RIM, Windows Mobile etc smartphones - many are with corporate/enterprise customers and this will distort the total pattern of downloads of apps. Conversely, far more true enterprise-apps will be sold to RIM, Symbian and WinMo smartphones than ever can hope to sell to Apple iPhones for the same reason. And enterprise apps often feature corporate licenses - often annual licenses - rather than single unit downloads - can be far more lucrative business than trying to develop a hit app game to the consumer market, for example.

On most other smartphones, a large proportion of apps will be sold to the enterprise/corporate client, bypassing any apps store. And with many employee phones, there are restrictions of what may be installed to it, limiting their total market potential to sell consumer apps. No other smartphone platform can replicate Apple's performance, when counted as a percentage out of its installed base of phones, due to these unique reasons about Apple's situation in smartphones.

USA MARKET IS ANOMALY

There is a further dramatic distinction. One third of total iPhone users are in the USA. but only 6% of all mobile phone subscribers of the planet are in the USA. The success of the iPhone is totally disproportionately in the USA. The smartphone applications market opportunity is dramatically more 'mature' in the USA than in the rest of the world. The US is very highly penetrated on personal computers in the homes and offices. Most PC users are quite familiar with application downloads and installs, and have personally done it many times, on many PCs, and are quite comfortable doing it. And no doubt, PC users find that the experience of an application installation onto an Apple iPhone is particularly pleasant, easy, hassle-free.

The rest of the planet is not like the USA. Even in the advanced parts of the Industrialized World, Europe and advanced Asia-Pacific, the penetration rates of PCs lag those of the USA, and their history of use by consumers is often far shorter. So users are far less familiar with the concept of apps to install to PCs. There is more 'fear of computers' so to speak, among regular consumers, especially those who in their work do not use PCs. Beyond the 1 billion people who live in the industrialized parts of the planet, the other 5.8 billion people do not have easy access to PCs at all (one PC for every 20 people on avarage, most of them have not touched a PC in their life). There is not a historical precedent for any kind of 'applications downloads' or installs.

What this means, is that the hysteria around smartphone apps stores is centered in the USA, especially around Apple fans and enthusiasts (but also Google, Microsoft, RIM and Palm) and they get ample 'good evidence' from their home market, which will (probably) not translate to the rest of the world. It actually distorts the picture being artificially strong in favor of an applications market for smartphones. Just like for example push-to-talk, a great mobile communications idea that worked in the US market due to it being so far behind in SMS, and never took off in the rest of the world who were far more advanced in mobile at the time.

By the way, while we are on the history side, Apple did not invent this apps store concept in 2008. The world's first Apps Store was launched by Japan's NTT DoCoMo as far back as 2001, as the i-Appli. All three big mobile operators in Japan have had apps stores for most of this decade

So, not all Apple iPhone smartphone users will install apps. Both the Apple and the US markets are 'extreme' and thus more apps-oriented than the rest of smartphones and rest of the world. Even among all other smarphones, the proportion of customers and the total number of downloads - will not be as great as Apple sees today with iPhone Apps Store.

Conclusion number 1 - the apps store maximum opportunity is a sub-set of all smarphones, and will be proportionately less successful on other brands of smartphones than the iPhone and in countries other than the USA.

Conclusion number 2 - Apple's iPhone Apps Store is a small subset of all smartphones and even in the USA, a far larger installed base of RIM Blackberries exist, and worldwide more than 10 times bigger Symbian installed base exists for apps. Lets not obsess only about the iPhone. If you do want to discuss smartphone applications, please do note Apple is a small slice of all smartphones. And apps stores exist for all major smartphones, and - very importantly - apps are also sold through other means, including business/enterprise apps, and don't forget embedded apps to the phone directly.

SMARTPHONES IS SMALL PART OF ALL PHONES

So we then compare and contrast. Smartphones are actually a very small part of all mobile phones in the world. When compared to personal computer sales, if we hit 180 million smarphones sold this year, that is about 64% of the size of total PC sales worldwide, and since last year, more smartphones are sold annually than all laptop style PCs (laptops, notebooks and netbooks) combined. So it is very easy to see why the global PC focused IT press is very eager to study smartphones.

But yes, we will sell roughly speaking about 1.1 billion new mobile phones this year. The market for non-smartphone mobile phones (cellphones) is over five times greater than the market for smartphones, out of new phone sales this year. When we look at the installed base, its even worse. There are about 3.8 billion actual activated mobile phones in use this year (out of a total of 4.6 billion phone subscriptions)

The total installed base of smartphones is about 550 million in round terms. So about 14.5% of all mobile phones in use on the planet are smartphones, 85.5% are simpler 'feature phones' or basic phones. Before you think - but I can't sell my app to simpler phones - think again. This year 50% of all phones in use are Java/Brew capable, meaning you can install apps to them! Thats 1.9 billion devices - almost twice the total worldwide installed based of PCs, and 3.5 times more than all smartphones - oh, and 54 times bigger opportunity than total installed base of iPhones. Did I get your attention?

Now, I am not in the least bit suggesting that its 'easy' to develop to this market, and yes, Java has all sorts of problems starting with a zoo of specifications, and you'd need to go through a myriad of environments to get the apps to your consumers - but hey, lets be clear about this. If we talk apps, Java/Brew will get you the world's biggest apps platform, far far bigger than all types of PCs. Why isn't anyone talking of this side of the business?

Conclusion 3 - a far greater mobile applications opportunity exists beyond smartphones, for all phones, on simpler platforms but with plenty of global coding and software competence, such as on Java and Brew.

THINK BEYOND THE APP

If you are thinking of your application, and the service you want to deploy. In most cases, you can deploy your mobile service either as a stand-alone installed app, or a 'service' on some service platforrm like HTML/web, or WAP or MMS or SMS etc. Now the economics get stunning. On the PC based web, you can reach a total internet-connected PC population of 1.0 billion (the rest of the 1.7 billion internet users access in web cafes or on their phones).

Then on the WAP so-called 'mobile internet' environment, you reach an installed base of.. get this.. 3.4 Billion phones ! Obviously not nearly all are actively using WAP services, but over 1.2 Billion people already do use the mobile internet - Yankee Group said 29% of the planet were active users of browsing on mobile phones at the start of this year. So you have an installed base of 1.2 Billion who need no training, their phones are correctly configured, they have the right pricing plans, etc, and they already consume mobile content via their mobile phone browser. It may be news via WAP or get their weather or sports scores or do Google searches or access Facebook etc. And if you are adventurous, to reach beyond - yes, globally you can target a potential market of 3.4 billion conneced WAP-capable devices in use around the planet.

Now consider the money involved. If you think your clients are willing to pay 2 dollars for the app 'download' on the Apps Store, wouldn't they be willing to pay a dollar a month for the 'service' instead? And you get 12 dollars of regular revenue annually from your customers, rather than one 2 dollar payment? This is the magic of mobile apps. The CEO of Softbank (Japan's third largest mobile operator/carrier, and its exclusive iPhone network) was just speaking at the Mobile Asia Congress this week and said the total value of mobile content service revenues in Japan alone - are worth 14 Billion dollars annually! Japan has had apps stores since 2001. Softbank is Japan's iPhone network. Yet its CEO says mobile internet content revenues is the giant market opportunity. Perhaps he knows something. Nobody is suggesting Apple's Apps Store generates even one tenth of that amount of revenues globally, this year...

But if you are willing to keep it a bit more simple and standardized, on a sounds, pictures, videos and interactivity -level, then there is a multimedia standard for mobiles, called MMS. You may think of it as 'picture messaging' and think its a lousy idea to try to charge consumers enormously to send pictures from one phone to another. That may be true, but the astonishing part is that MMS is a global hit.

MMS is enabled at more than 2.8 Billion mobile phones and their networks, and has 1.4 Billion active users. Yes, more users of MMS than all PC based internet users, far more users than total user base of email or Google or Facebook or YouTube or Twitter. MMS has almost as many users worldwide as there are TV sets on the planet (its neck-and-neck this year, next year MMS will be bigger). All sorts of entertainment and news services are being deployed on MMS from pictures to clips to sounds to games to quizzes to coupons etc etc etc. And MMS is fully interactive, like SMS. How big is MMS ? Globally worth 26 Billion dollars last year said Portio.

While many who do not understand this industry very well, still think MMS is somehow a 'failure', in advanced markets its totally normal, used by the majority of mobile phone owners, and generating tons of money. The CEO of China Mobile (the world's largest mobile operator/carrier with 500 million subscribers) just said at the Mobile Asia Congress that MMS in China is a 'mature' mobile content type in line with SMS. In Norway 84% of the public send MMS. It is experiencing phenomenal growth. In Australia MMS grew 300% just last year. Even the USA is getting into MMS, as four out of ten Americans have sent an MMS according to Jagtag. If you can deliver your customer mobile experience on a simple multimedia format, then MMS is your best bet. The Apple Apps Store total revenues are likely to be far less than a billion dollars. MMS delivered 26 Billion dollars of revenues last year. Hello?

And if you go really simple, there is SMS text messaging. 3 Billion active users on the planet, and over 99.9% of all 3.8 Billion connected mobile phones on the planet has that ability. 76% of all mobile phone subscribers are active users of SMS text messaging. There is simple SMS and premium (paid) SMS and it is obviously an interactive medium. SMS even has the ability to launch WAP page sessions, so you trigger 'mobile internet' experiences from SMS. Worth globally over 100 Billion dollars, SMS is the data giant, either on mobile or on the PC.

So Conclusion 4 - for a truly massive audience and a truly massive revenue opportunity, that is totally viable today, go mobile 'services' not mobile 'applications'. Use WAP, or MMS or SMS, depending on your need, and you reach an active user base that is at a minimum 34 times bigger than the total installed base of iPhones. Except that these WAP users are all already experienced to pay for their WAP experiences. On MMS the total active user base is 40 times bigger than the total installed base of iPhones and on SMS it is 88 times bigger - and every one of these users is willing to pay (at least a little bit) extra for that MMS or SMS experience. Most iPhone users don't pay for apps, they only download free apps.

Obviously we can do free on mobile services as well, do free experiences, adver-games, promotions, coupons, trials, sponsored messages etc. But best of all, the user is not whining like on the web that somehow 'everything needs to be free' but the consumer on mobile is quite willing to accept, that all content and services on mobile cost something.

THIS IS OUR BIGGEST OPPORTUNITY: SERVICES NOT APPS

So, apps are a great opportunity - not for mobile, but for the much smaller IT/PC industry. Apps are a great chance for any service developer to get some money now, and if the Apple iPhone market is suitable for your needs (especially any developers in the USA), it is the easiest to develop for. Their total market however is tiny. Less than 1% of all phones on the planet are iPhones. Even in its best market, the USA, only 3% of all mobile phones (cellphones) is an iPhone. You can only reach 35 million iPhones globally and about 12 million in the USA today. It is a niche only, a rich person's luxury niche, no matter how you slice it.

If you do apps, then remember, Symbian and RIM/Blackberry are far bigger by reach of their audience - but yes, you get device fragmentation issues etc. It makes sense especially if you are based in the USA, to start with the iPhone because it is so easy to develop to and to sell on. But don't limit yourself to that tiny lake, go for the big seas of the other much bigger smartphone platforms.

If you do apps, think also beyond smartphones. The Java/Brew market is several times larger than all smartphones of all operating systems, rolled together. Its not always a friendly developer market, but you have reach into most pockets of most consumers in the Industrialized World, and well into a quarter of all pockets in the Developing World. So if the iPhone app market is a lake, and other smartphone markets are seas, the Java/Brew apps market is the ocean.

Beyond apps, think services on mobile. WAP, MMS and SMS will totally dwarf the smartphone market size. In all countries today these are viable service environments to deliver 'browser-based' and 'web-like' (but definitely not 'real internet') experiences via WAP, or very robust and compelling interactive multimedia experiences on MMS, or basic interactive messaging services via SMS. It is different selling applications for download, or selling a monthly service, but the scale is so enormous, its like comparing the reach of the oceans, to the reach of the air on planet earth.

Thats my view of apps stores. I am certain, that when we look back at the industry ten years from now, the vastly greater opportunity in mobile content, apps and services was selling services than applications, no matter how successful smartphones may become this coming decade. Apps are a side-show, the services are the main event. If you develop apps now, please study the services opportunities, and make sure you capture a piece of that bigger pie now, before everybody else is doing it too.

Highlights of Day 2 at GSMA Mobile Asia Congress in Hong Kong

I gave my review and comments on Day 1 of the GSM Association's big Mobile Asia Congress that was held ere in Hong Kong this week. I gave Twitter updates also about Day 2. I will give here my main reviews and comments about Day 2 to complete the wrap-up.

We had Masayoshi Son, the CEO of Softbank, the company that is also known as Yahoo Japan, who bought Vodafone's failing mobile network in Japan (earlier known as J-Phone) and is now the third biggest mobile operator, but also fastest-growing of Japan. Softbank is also the exclusive iPhone network in Japan. Son-san pointed out that his background is the internet, Yahoo etc, and he is late to mobile, but inspite of that, he said very emphatically, that "The PC internet is gone, because of the 2nd IT revolution: mobile." He gave us stats on the status of the mobile industry in Japan today - that 55% of Japan has migrated past 3G to 3.5G, that the Japanese mobile content industry is worth 14 Billion dollars annually, that 50% of mobile data is consumed in the home; the peak time for mobile data consumption is between 9 PM and 10 PM; and smartphone users consume 10 times more data than non-smartphone users.

Son-san also gave a bombshell announcement, that they will turn off their 2G network already in March of next year, 2010. I believe this is the first network and first country to do so. Their bigger Japanese rival NTT DoCoMo will turn off their 2G network a year later in March of 2011. He also said that all digital content (globally) will end up on mobile phones.

We heard from Singtel's CEO, Allen Lew. Singtel is not only Singapore based mobile operator, but that distinction is not seen as very impressive in the city-state of 4 million inhabitants. But Singtel also is an owner with mobile networks in many countries in Asia-Pacific from Australia to the Philippines so the Singtel Group is one of Asia's telecoms powerhousese. Mr Lew said that as Singapore is so small and very advanced in high tech, they use the Singapore home market as a live test-bed for innovation ideas, that they are considered for their other affiliates. Mr Lew said that in Singapore almost 50% of smartphone owners are shifting web surfing activity away from PCs.

Telenor's President and CEO (Norway's Telenor is world's 5th largest mobile operator group by subscribers, with properties in Asia in Thailand, Malaysia, Bangladesh, Pakistan and launching in India) Jon Fredrik Baksaas spoke about the eco-friendly initiatives they have, such as solar powered cellular network base stations etc, but an interesting tidbit that came out, is that in Europe, Telenor has installed 870,000 household electricity meters that are remote digital meters and operate on the GSM cellular network, in Sweden. As Sweden's population is only about 7 million people that is probably a third of all households.

In the afternoon I listened in on the Mobile Broadband Business Case session, and first up was my friend Tetsuzo 'Ted' Matsumoto, the Sr Executive Vice President at Softbank. As usual, he had a lot to say, and said for example, 'The mobile internet is the core of the future of the ICT industry'. He joked that the Japanese spoke 'enough' on phones already, but went to explain that you cannot increase the total traffic of voice, it is finite, we have only so much capacity to talk per person per day, but the capacity to increase data traffic per person is enormous growth opportunity. And business-focused as always, Matsumoto-san also told us that the business in data dongles in 3G is not as profitable business, as is services on phones, so they focus on building their 3G and beyond services around phone based services, not data dongles for laptops.

Grameenphone (Bangladesh's biggest mobile operator) Head of Regulatory Affairs, Mahmoud Hossain said they are bringing the internet to rural villages, via mobile, on shared solutions so many people in the village will share in the service and its costs. 

Rajat Mukarji of Idea (one of India's largest mobile operators), told us of the Indian market, where the average price of a voice minute is 1 cent (US). He  Mr Mukarji also said that in India mobile is the first screen, not the fourth screen; and mobile is the first internet connectivity opportunity for most people of India. 

Then my friend Sigve Brekke the CEO of Telenor Asia Group (the five countries in Asia out of Telenor's 15 affiliates, that have over 80 million subscribers and about half of Telenor Group's total customer base). Mr Brekke told the Congress that mobile broadband in the less developed parts of Asia meant an internet for the small screen. He said that the internet on mobile is different from the internet on PCs, and pointed out that this meant a re-definition of the internet concepts, with new services and new business models. He said very simple pricing was also needed, something easy to understand, price by the hour, by the day, by the week - that kind of models. Mr Brekke also said that the biggest single service opportunity for mobile broadband in Asia was 'social networking' (haha, sounds familiar to our readers, eh?)

Next we heard from Tony Warren, GM of Regulatory Affairs at Telstra (Australia's biggest mobile operator) who told us that 60% of phones in Australia are 3G already, and over half of mobile data is now non-SMS type of more advanced mobile data. And he said that MMS is experiencing enormous growth, grew 300% in the past year. 

At the last session I attended the Segmentation session. There we were treated to a truly magnificent presentation on mobile segmentation by MTS (Russia's biggest operator, one of world's 10 largest mobile operator groups by number of subscribers) Group Director of Strategy (and my good friend) Garrett Johnston. Garret's presentation was rather mobile operator segmentation 'technique' and detail-specific, probably not of great interest to our readers, but a few tidbits worth mentioning that touch on the general level. He said that when MTS ran its new segmentation model, for its first target segments they improved customer profitability by 12% to 14%. He also said that they now manage microsegments dynamically based on actual behavior, to a granularity of 'thousands' of segments. As my comment from the outside, this is essentially then on par with global leaders like the operators in Scandinavia.

And there was a presentation by Norm Lo the Asia Pacific VP for RIM. I think it shows how much RIM has evolved away from being only a business/enterprise oriented smartphone maker, that Mr Lo showed several slides focusing on consumer apps and services, before he mentioned business/enterprise apps for the first time. Times are a'changing.

Thats my summary, was a great event, learned very much and made many good new contacts and friends, and met up with several past friends. I was very sorry to miss Ben Joffee of Plus8Star and MoMo Beijing, a good friend of mine due to being in a conflicting session.

News and commentary from GSMA Asia Mobile Congress/Hong Kong

I had the honor to present to the GSM Association Asia Mobile Congress today here in Hong Kong. It is a very prestigious event featuring keynotes from CEO's of just about the Who's Who of Asian mobile telecoms, ie CEO of China Mobile (world's largest mobile operator), CEO of NTT DoCoMo the singularly most innovative company in the history of mobile - as well as the company that launched this whole industry 30 years ago, etc. And as Asia itself is the most advanced market for mobile telecoms, this is really the 2 day event if you want an overview of the cutting edge, and often bleeding edge of the mobile telecoms industry.

I did a live Twitter feed from the event today, and will continue tomorrow on Day 2. But Twitter updates are, haha, well, very brief. There were several matters that needed a bit more commetary or context. So I am doing an update now, with those items I considered most newsworthy and relevant, and mention them here, with my commentary. Welcome to the future of the digitally converging world.

To start it off, Rob Conway, CEO of the GSM Association gave a number of predictions. The stunning one to me, was that he said there would be the "next 4 billion mobile subscribers" and the world would grow to 8 billion subscriptions, ie the planet's 6.8 billion people would in many cases have 2 or more subscriptions. Now, the regular readers of my book and this blog will know, I have been saying that for a long time. The stunning part is that already now the GSM Association is willing to say that will happen. Amazing. You can take it to the bank, the world total mobile phone population will double from where it was at the start of the year, and yes, the whole planet will have more phones than people. Cool.

Next up was Chairman Chang Xiaobing from China Unicom. (What is China Unicom? China's second largest mobile operator with 142 million subscribers - bigger than AT&T and Sprint put together). Chairman Chang had listed SMS, WAP and MMS as 'mature' technologies for China. Here a vital comment - in many markets of the world, MMS is an emergent technology. Even in many parts of Europe or North America, MMS has less than one in three users. In China it is so massive and common, it is 'mature' like SMS and WAP. Great. And yes, I keep saying, don't focus on the tiny opportunities of smartphones or apps stores, go for the truly giant opportunities - MMS has 1.4 billlion active users worldwide and over 2.5 billion phones can accept MMS services and communications - here is your big opportunity.

Then Manoj Kohli, the CEO of Bharti Telecom of India (another giant, Bharti has over 110 million subscribers). Mr Kohli told the conference that in India already 20% of all mobile phone owners have 2 or more subscriptions. He also told us that as India will add 500 million new subscribers by the time frame of 2014-2015. That is another Europe, folks, in size. India is currently adding 10 million new mobile subscribers every month. And most revealingly, he said that in India the customers will go from 'no internet' directly to 'mobile internet'. The vast majority of Indian internet users will skip the PC metaphor internet. And as I tweeted this, several friends retweeted it adding that this will also happen in markets such as Indonesia and the Philippines. Yes I agree.

Next we heard from Wang Jianzhou the Chairman and CEO of China Mobile, the world's biggest mobile operator (yeah, China nMobile alone has over 11% of the total global mobile phone subcriber base, and yes, at 500 million paying customers on mobile, thats as big as all of Europe, or nearly twice the mobile phone subscriber base of the USA). We were told that on the Chinese 3G standard of TD-SCDMA, they already have 3G phones being sold that cost about 1,000 Yuan, or about 130 US dollars. The average China Mobile customer spends 1 minute per day on voice calls, but sends on average 3.6 SMS text messages per day.

Then we had Yamada-san, the President and CEO of Japan's NTT DoCoMo, Mr Ryuji Yamada. NTT was the company that commercially launched mobile telecoms 30 years ago, and NTT DoCoMo, its mobile spin-off invented the mobile internet ten years ago. This is the most innovative company in mobile of all time - apps stores, WiFi phones, mobile advertising, mobile wallet, QR Codes, you name it, NTT DoCoMo did it first. And bboy what a treat we had from Yamada-san on where the most advanced mobile telecoms market - Japan - is today, and where it is headed.

We heard that on NTT DoCoMo's network, today already 42% of their total revenues come from non-voice data services. Like I've been saying for a while, don't call it a mobile 'phone' (or cellphone) anymore, call it just a mobile, that is more accurate. But yes, then a bombshell - NTT DoCoMo is so far in its migration of its customer base from 2G to 3G, they will terminate 2G in March of 2011. Wow. 16 more months. Wow. Think of how far they are in the future. Two years ago the 'hot' and 'sexy' phone in North America was the original 2G iPhone (which was never sold in Japan due to being obsolete). Now Japan is already shutting off their network that is on that generation. China just started 3G this year. Many countries like India have not even allocated 3G spectrum yet, but Japan is turning 2G off. This is mega. And yeah, makes sense that it would be in Japan first (and on NTT DoCoMo's network at that). Cool. Brave move, congrats to NTT DoCoMo.

Yamada-san also told us of their new 3G video TV service, they call BeeTV. BeeTV is special in that it is optimized for the small screen, not re-purposed video content from TV and the internet. BeeTV in only six months has achieved 800,000 paying subscribers - who pay 315 Yen per month (about 3 USD). And racing to be first with 'real' 4G - not the hyped propaganda so-called 4G of WiMax etc that many now offer (the ITU will nont ratify the standard(s) for 4G until October of next year, so nobody can have 4G before then - NTT DoCoMo is committed to launching LTE this December 2009 with data cards, and bring in LTE phones in 2011  Cool. If LTE is accepted as 4G, as is widely expected - then NTT/NTT DoCoMo would have been the first to launch 1G, 3G and 4G (Finland's Radiolinja/Elisa - spoiled the streak launching 2G first when they opened the first GSM network into commercial production, yeah, Elisa was my former employer too haha..)

But wait, we are not done with the massive announcements and updates from the world's most advanced mobile operator. Yamada-San's 20 minute presentation also told us that NTT DoCoMo's i-Consierge service (yes, think of it as your personal butler, the phone learns your habits and starts to help you with your life, this is like magic) has 2.3 million paying subscribers one year from launch. Their i-Channel idle screen invention (one of the case studies in my latest hardcover book Mobile as 7th of the Mass Media) is spreading and they have launched it also with their partner in India, Tata, who offer Cricket game updates via the idle screen using i-Channel. And what of smart phones and apps stores? NTT DoCoMo feels the future is for open systems, not closed ones like the iPhone, and they are bringing their Symbian based smartphone O/S and apps stores to be fully open.

And if that was not enough, we had more today from a 50/50 partnership between NTT DoCoMo, and Japan's biggest ad agency, Dentsu. The company is called D2 (or formally, D2C) and its President and CEO, Akihisa Fujita presented to the afternoon session. Fujita-san was my techno-geek hero, by not only doing his presentation totally from a smartphone - and his had several animations and video clips with sounds etc - but also, he did the whole presentation using two phones, one in each hand. Cool. I gotta master that haha, but yeah, it would take an Advertising Man to do something flashy like that. He was truly 'kawaii' (cool in Japanese). Yeah, D2 is the world's first national ad agency that was fully providing mobile ad services, and has been the innovator for the mAd industry for most of this decade. And boy did we get a treat again now.

First off, Fujita-san showed us a cool adver-app from Japan. It is a free 'flight simulator' game, in very realistic 3D graphics, where you can go and fly above major cities of the world. Note this is a Japanese adver-game, he showed the plane flying over London. What's the gimmic? Its an advergame by Red Bull of course, who sponsor that 'formula one' style airplane racing series. This is a related mobile game. Very very cool, I immediately wanted that onto my phone.

Oh, of those bizarre stats that say the mobile ad market globally this year is about 1 Billion dollars or so? Japan's mobile advertising market in 2008 was worth 900 million dollars. So it'll be a Billion dollars this year in Japan alone. Anyone who says the global mAd market is a billion or billion-and-a-half this year is clueless to this industry and you should ignore their numbers. But I digress, lets get back to D2. Do you like QR Codes, 2D barcodes? NTT DoCoMo of Japan (together with D2 obviously) launched them first. How big is usage today, four years later? 84% of all Japanese mobile phone users are active users of them. Yes, it will be big in your market too, this is so incredibly user-friendly, it will be a hit in absolutely every market.

Specific ad campaigns. We were treated to samples of several. I particularly liked a Coca Cola campaign for a new drink, that sent the first 300,000 Japanese consumers an m-coupon for a free can of the new drink. And the cans and coupons could be redeemed at vending machines. Cool. And then of adver-dramas on mobile TV. They had created a series of 'soap opera' style romantic drama mobisodes for a Japanese brand, which featured a parallel set of 2 'views' to the same story. You could watch the 'boy's view' or the 'girl's view' to the same story. All filmed obviously in a style very suited for the smaller screens of the phone. We saw 2 of the episodes, with the videos shown side-by-side, and it was very clear, that the 'clever bit' was that in this story the full romantic story-line was not obvious from viewing only one of the two, and viewers obviously would be very strongly incentivized to see both sides of the story - with the product-placement getting obviously double-exposure with the viewers. Very very clever.

Finally, Fujita-san gave us the most memorable quotation for the day. He said 'to sell mobile ads, is to reject mobile ads'. This most counter-intuitive statement made sense when he explained - that there will be lots of opportunities to push ads at consumers, that are not optimal, the ad itself not suited, or the situation not optimal. The mobile is not the only channel. Often another channel is better for that use. The advertising exectuive needs to be very critical and selective, to only use mobile when it truly suits the situation - because mobile is so personal. We must always thrive to bring excellence and customer satisfaction on mobile services and content, even more so on advertising on mobile. So yes, the ad exec must be brave enough to say, no, lets not do that on mobile. That will ensure that what goes on mobile will bring satisfied customers, and in the long run, a far more healthy and wealthy mobile advertising eco-system. Very clever, very insightful.

Finally, at the end of the day we had the GSM Association Asia Mobile Awards. Many of my friends and customers were represented among the finalists and many won. I don't want to mention all of them here. I want to single out one winner, as this was amazing. Grameenphone and Huawei won the 'Green Mobile' award for their 'green' network initiatives. What makes this amazing, is that this is obviously in Bangladesh, a country very poor and where average ARPU (Average Revenue Per User) is under 5 dollars, and new customer ARPU is as low as one dollar per month. In the West we used to think that you needed a minimum of 20 dollars per subscriber per month to make this business sustain any profits. Grameenphone is managing it at a tiny fraction of that - but here is now the point - Grameenphone has been able to do major 'green' initiatives in their network, inspite of the very low revenues per subscriber that are involved. It makes this achievement truly exceptional. Congratulations to all my friends at Grameenphone and obviously their parents, Telenor (my first reference customer from back in 2001).

That was Day 1 at the Mobile Asia Congress. I will also Tweet from Day 2, and if the day is anything like today, probably also be forced to do another blog about it, haha. I had a wonderful time today (my presentation was about the 6 business models of mobile social networking).

Why Mobile Data Services (or 'Mobile Internet") is 'better' than old legacy PC based internet

This blog is likely to generate a lot of heat. I hope you read it carefully, and give it some thought. I am going to argue that the 'mobile internet' (WAP etc services) as distinct from the 'real internet' is not only different from the old legacy internet, but actually 'better' by most measures we could use, including bigger by reach and bigger by users and better by inputs and outputs, etc. I also argue that the 'mobile data' opportunity is even bigger, making 'mobile data' a far more appealing and lucrative opportunity than the 'legacy' PC oriented 'real internet'.

REAL INTERNET

First, lets be clear about a couple of definitions. The internet is all IP (Internet Protocol) services, whether browser-based, ie WWW WorldWide Web based services, or countless others, such as VOIP (Voice Over IP - Skype is a perfect example of this, Skype does not need the 'Web' to operate), or FTP File Transfer Protocol, or email, or IRC Internet Relay Chat, etc. There are many customized enterprise applications that do use the internet protocol, but do not use the worldwide web. So the Internet is a more broad term, and the web browsing that you probably use now, via Microsoft Internet Explorer or Google Chrome or whatever browser you now use, is a sub-set of the total internet. The Internet is 40 years old this year. The Internet has 1.7 billion total users, which includes those who access the internet on a PC from home or the office; those who access the internet from a shared PC, like at an internet cafe or a school; and those who access the internet on a mobile phone. The total user base is 1.7 Billion, and many will have multiple ways to access, so we may have a PC at home, but our kids may also access the internet at their school, and one of the parents might have an iPhone or Blackberry, and access the web or email via that device.

To be clear, we also have 'the web' ie WWW access. That became possible 20 years ago, so Web Browsing, as a specific type of internet use, is 20 years old. Most of the consumer use of the internet today, and a vast majority of business and government use of the internet, is Web access, but not all. So yes, when you search something on Google, or send an email on Hotmail, or buy a book on Amazon, or watch a YouTube video or update your Facebook account, you are accessing both the internet, and you are browsing the WWW. 

REAL INTERNET ON MOBILE

There is something called the 'mobile internet' which is not the same as the 'real internet' on mobile. We have had the ability to access the fully un-altered real internet, in full, unrestricted, on a phone, since the first Nokia 9000 Communicator gave us that ability in 1996 which included both full web browsing (ie WorldWide Web access) and full email access, more than ten years before the first iPhone and half a decade before the first Blackberry phones. So doing the 'real internet' on a phone is absolutely nothing new. It is a very inefficient work-around to try to solve portability to the mostly fixed concept of the legacy PC based internet. We can obviously do similar internet access also via WiFi today in many places, and then it becomes a question of pricing plans and specific device features, on whether we do our Twittering on a phone and 3G high speed mobile for example, or on a laptop connecting through WiFi at a Starbucks. But doing the real internet on a phone is a severe compromise, as the old legacy PC based internet has recently evolved to assume a broadband connection on an XGA resolution screen with 1024 x 768 pixels.

That means, that when you get a well-optimized and visually rich video environment intended to a PC screen, and it is then squeezed to a 3" type of pocket screen, possibly with some image compression as well, the user gets a far inferior experience than was intended. Note, first, that this is not how the WWW has 'always been'. The original WWW was launched at a time when most PCs had monochrome or very basic color screens, and VGA (640 xc 480) screen resolutions were the top end - and almost no PCs could do sound. IT was not even possible to show a video clip like those on YouTube, with the 'original' Web. The WWW has evolved dramatically over the past 20 years.

But lets be clear - it is perfectly possilble to do the 'real internet' on a phone, this is nothing new, and there are now roughly speaking 700 million 'smartphones' which on the device itself, tend to have a browser and can do the 'real internet' often natively, straight out of the box, or in most other cases, after a small upgrade of the software on the phone. But - not nearly all are then able to do that, due to the limitations of the mobile operator/carrier - which typically will sell 'internet access' as a separate service, and this may be prohibitively expensive, or still today, in many networks, simply not offered for consumers. What the mobile operators/carriers prefer to sell, is what is commonly called the 'mobile internet' that typically works on WAP or i-Mode or similar browser based more restricted environments.

And before we go further, there is one more variant of the 'real internet' on mobile networks - which is laptop data access on data cards and dongles, most typically based on 3G or 3.5G ie HSDPA technologies, but also are offered on slower speeds such as GPRS and EDGE. These services provide the 'modem' connectivity on broadband-style price and data packages, through the cellular mobile network. There are hundreds of millions of such users globally today, and in many emerging world markets, the majority of 3G subscriptions are actually 3G data cards and dongles, connecting PCs to broadband, rather than 3G phones. The reason why this is so prevalent in the emerging world, is that there typically broadband connectivity on landlines is very rare and expensive and unreliable. But once 3G networks are rolled out, they bring 'broadband-style' connectivity speeds for internet access, instantly to most parts of the major cities, extending 3G to many areas where traditional wired broadband is simply not available.

MOBILE INTERNET IS NOT REAL INTERNET ON MOBILE

Then we have the 'mobile internet'. This is NOT the real internet on mobile. The 'mobile internet' is dramatically different from the old legacy PC based internet. It is best typified by WAP and i-Mode services, by which the browser-based services are OPTIMIZED for the small screen. They still are mostly the same services by your familar internet brands, your Google search, your Hotmail email, your Amazon book purchase, your YouTube video and Facebook update - but on the 'mobile internet' version, the browser page itself and the service design is (more or less) optimized for mobile phone users. Try it. Pull out your phone now, and do a Google search on it. You will find that your phone gives a totally different appearance of Google than on the PC. The much smaller screen does not give all those options you get on the Google 'real internet' based home page. Once you do a search, you get less results per page, and you get constantly numbers-oriented navigation options - so you can use the numeric keypad for navigating - the 'mobile internet' experience is optimized for use on a phone, and users are not expected to have a mouse to click on, but are expected to have a numeric keypad to click on options, etc.

Two very important aspects of the 'mobile internet' - first, it is expected to be significantly slower than the PC based and usually broadband speed 'real internet'. Secondly, the screen content is designed for pages of less than a quarter size of the 'real internet'. That means that for example, on this blog site, you see the columns on both sides of the page. If you access this Communities Dominate blogsite on a phone, it often gets very confused in how to display the page (sorry, we are not mobile optimized here, haha, don't do as I do, do as I say, haha), so they will for example try to display first all of the items on the left column - which is mostly 'background info' and is quite painful for any mobile access who want to only read the center column, where is the newest blog stories...

If we wanted to re-design this blog for mobile reading, we would have to remove the left column, and also cut my horribly-long stories to only a couple of paragraphs, with a follow-up link, to the rest of the story, as otherwise, on a phone, the service would typically try to load this whole page before displaying it to you. As regular readers know, I can go for thousands of words on any day, and my blogs therefore would be very inconvenient to read on the 'mobile web'

But, lesson number 1 - the 'real internet' is there for PCs, and can be done on mobile phones. It is not optimized for mobile consumption, but hundreds of millions of phones can already access the 'real internet'. Separate from that, is a newer 'mobile internet' which is not the real internet, it is different. To start with, it is designed for small screens and for slower speed access. The look-and-feel tend to be similar, ie Google still looks like Google and Amazon still looks like Amazon, but the total user experience has been optimized for the smaller screen.

MOBILE INTERNET IS BIGGER

So, the real internet is 40 years old. It has achieved 1.7 billion users on any type of device. How many use the PC based internet? ComScore measured earlier this year, and found that for the 1.1 billion total personal computers in use, 1.0 billion are connected to the internet. And counting multiple users of one home/office PC, as well as single users with multiple PCs, (ie you may have a PC at work and another at home; or perhaps a desktop on your desk, and a separate laptop for travel; or perhaps your old laptop on which you keep the family photos etc, but a new netbook now for your travels, etc). And ComScore found 1.0 billion total users of the PC based internet at home or the office. 

The 'mobile internet' was invented by NTT DoCoMo in 1999, literally ten years ago. Yankee Group measured that at the start of the year we had 29% of all mobile phone users accessing the 'mobile internet' ie any kind of browsing on a phone. Out of 4.0 billion mobile phone owners at the start of the year, there were 1.16 Billion active users of the 'mobile internet'. So the fixed internet on personal computers has reached one billion active users in 39 years. The 'mobile internet' passed 1 billion active users in 9 years. This is what I mean by the mobile internet being bigger.

THEY ARE NOT THE SAME

Many are arguing there is or there will be or there should be one internet. That is not possible. The 30 years newer 'mobile internet' introduced several elements that are absent from the ancient 'real internet'. For example, on the 'mobile internet' every single user is uniquely, permanently defined. Not by a 'dynamic' IP address, like all internet users, where they may or may not be identified as the same user on their connection - mostly home users tend to be identified as the same user; but even office users behind office routers and firewalls, tend to be dynamically identified, so their desktop PC will get a different identity in the network on given connections - the internet connection is not dependent on your personal identification, that is an additoinal security system that your employer or your internet access provider ask you to provide. But the PC itself is often not defined by a standard non-changing connection. What is far worse, is any portable PCs, ie laptops at WiFi hotspots. Now the same user is completely lost by the network, and if you access on your laptop in three separate coffee shops on one day, your laptop, at its connection stage, is mistakenly identfied as three separate users, given three different IP addresses. The legacy intenet is simply not designed to accuately keep track of all who access it.

The 'mobile internet' is far superior to this. While the 'mobile internet' can assign an IP address for your phone, the point is that the phone is already identified by its phone number. That is globally unique, and will not change (unless you get a new subscription obviously), and it makes no difference whether you are on a post-paid contract or are using a 'throw-away' pre-paid connection, that one connection is uniquely identified in the network, every time you use it, in whatever country, for whatever use, whether for voice calls, SMS text messages, MMS picture messages, or yes, accessing any Google or Hotmail or Amazon or YouTube or Facebook page, the 'mobile internet' all of your connectivity is accurately mapped to your account. This is literally impossible on the current 'IPv4' version of the legacy internet. There is a vastly improved internet protocol coming, called 'IPv6' but currently less than 1% of all internet connections are on this newer format. So at the very least, 99% of all internet users are not accurately able to be identified. But 100% of all mobile phones are uniquely identified by their phone number - and have been from day one of the 'mobile internet' ten years ago.

This is a night-and-day difference on services on the newer, better, 'mobile internet' that is reality today, has been reality for ten years, since the first mobile internet service went live in Japan in 1999, and is still not possible for 99% of 'real' internet, legacy old PC based internet users.

So, anyone who says, we should have one internet, or there is only one internet, or the mobile internet should become the 'real internet' simply does not understand, that the 'mobile internet' is a far more advanced internet, and has delivered what the legacy internet is desperately hoping to achieve - that IPv6 project is literally ten years old, so this is truly a case of the old legacy PC being 'envious' of the newer mobile internet.

MONEY INTERNET 

There is a second inherent ability that every mobile phone user has, and no 'real internet' user has, and that is the ability to pay on a click. On the real internet you probably have already used Paypal. That is a clumsy work-around on the internet, which - after you have signed up to the service - allows you to make payments via your PC, on a click. The total user base of Paypal is about 10% of all 'real internet' users. For anyone else, it usually means if you want to pay, you have to give a credit card number, meaning you have to enter your sixteen digit code, your name, your address, your expiration date, the security code, etc. And while most PC users in the Industrialized World do have credit cards, the majority of internet users in the Developing World do not have credit cards.

On the internet there is no way to collect payments on a single click (without a separate solution like Paypal or a credit card). But on any mobile phone, in any network, if the mobile operator/carrier enables it, you can charge payments off the phone account, at a click. This includes such simple services as selling ringing tones and voting for American Idol types of television shows, and getting news updates on SMS text messaging etc, and charging that to your phone account. This is as valid on monthly contract accounts, as on pre-paid accounts. Every mobile phone user can be offered services that function on a 'click-to-buy' model. All of the mobile internet can work this way, and thousands of wealthy service providers on all continents, offer WAP and i-Mode services, earning billions of dollars out of click-to-pay and monthly subscription services on this principle.

The 'mobile internet' is 'inherently better' than the legacy PC based internet, because the mobile internet can do all that the fixed PC based interent can do - while not necessarily as well - but the mobile internet can do things the PC internet cannot do. I have give you two - perfect identication of every unique subcription, and the ability to offer every user a pay-per-click payment method. The 'mobile internet' is literally the money internet. How big? The content revenues on the mobile internet are more than twice the size of the content reveneus on the older 'real' internet - and remember, the majority of the content revenues on the 'real internet' are pornography and gambling revenues. The majority of the content revenues on the mobile internet are music, gaming and news services. The mobile internet while younger, is already more mature as a content channel, than the legacy old PC based 'real internet'.

7TH MASS MEDIA IS MORE THAN MOBILE INTERNET

Now I hope I have proven to you, that there are two distinct service environments, which have some overlap, but are different. The 40 year old 'real internet' reaches a billion PCs and has a billion users. The real internet cannot identify its users accurately, and cannot handle payments in its native form. It is possible to do the 'real internet' on a phone, this idea is 15 years old. Then there is the 'mobile internet' which is optimized for a smaller screen and slower access speeds. It offers the chance to identify all users perfectly by subscription, and to handle payments. The two are different. They will continue to be different. 

The old legacy PC based interent is called the 6th mass media, after the Worldwide Web was introduced 20 years ago. (of the seven mass media, print was first, then recordings, then cinema, then radio, then television as the first 5 mass media; the internet became 6th mass medium and mobile now is the newest, the 7th). The 'real internet' on PCs is very powerful as a mass media channel, and it is cannibalizing all sorts of media content from the older mass media, such as music sales (recordings) and TV (IPTV) and newspapers and books (eBooks) etc. For the most part, the content offered on the 6th mass media internet, on the WWW, tend to be copies of older media formats, so for example, the newspaper websites, tend to be organized with similar news headlines, news body of text and pictures of news stories, as the print editions. But the internet is a newer mass medium and it has unique abilities that the older media cannot do. The internet can do interactivity for example - so they ask you to post comments to their blogs and reader comments and send messages to the reporters who wrote the story. None of the first five mass media could do that prior to the internet. And the internet brought us search, now any modern website includes the search button on the top of the home page. Again something you could not do with any older media.

Now, consider the mobile phone as a data service platform. It can do all that the old legacy PC based internet can do. Not necessarily all as well, mind you, but a phone can do the 'real internet' - not unlike a 5th mass media TV set can do 3rd mass media 'cinema' content and in fact every movie ever released has been brought to the small screen (excepting for the newest releases, which all obvioulsy all will come to a TV screen soon). Every movie ever made, even though cinema purists argue that a movie is not the same if experienced on a small screen TV at home, compared to its 'intended' medium, the cinema theatre. Similarly every existing internet service and content can be delivered to a phone, with the only limitations being any blocking by the mobile operator/carrier, such as often they want to block us from using Skype on a phone (unless we agree to pay extra for it). This is not true across all seven of the mass media. You cannot show a cinema movie on radio for example, or offer books to read through the TV screen.

Technically the 'real internet' can be done on any mid-range phone, it is only a commercial matter of whether our providers bother to offer all of the 6th mass media internet to us on our phones.

Now, lets consider the 7th mass media ie mobile. The 7th mass media is FAR MORE than the 'mobile internet'. Remember, that we can do the 'full internet' on a phone, and that the 'mobile internet' is inherently better, as it can do more than what the legacy PC based internet can do (identification, payments to name but two). Now consider mobile as the 7th mass media channel.

So approximately 1.16 Billion mobile phone users globally (29%) were active users of 'browsing content' ie WAP, i-Mode and 'real internet' services on a phone at the start of this year. That already is more than the total PC based users of the real internet. But then there is MMS picture messaging, which is the fastest growing service category of mobile. MMS had an active user base of 1.4 billion at the start of the year. In those markets where PC penetration is low - most of the Developing World - the MMS platform is the most used 'multimedia' service platform delivering news, pictures, video clips, music and advertising. Nearly half of Asian mobile phone owners already use MMS based services. In Europe over 40% of all mobile phone users are active users of MMS, and European leaders, Norway report 84% of all users as active users of MMS.

Lets be clear - most people with cameraphones will not send pictures to other cameraphone ownersusing MMS. Most pictures on cameraphones are shown by passing the camera from one person to the next, to show pictures - no transfer of pictures whatsoever. If pictures are transferred, that is mostly by bluetooth transfer from one camera to anter. But MMS allos user-generated content to be moved and shared. MMS is used for example to upload pictures from cameraphones to various social networking services on mobile. And MMS is used in citizen-journalism applications such as CNN i-Report. But a vast range of services are where MMS is not used by the mobile phone owner to send pictures and videos, it is used by brands, advertisers and news media to send multimedia content to users of phones. Do not think that because YOU do not send pictures from one phone to another, that MMS itself is not a huge hit worldwide. Portio Research just reported that for 2008, MMS delivered 26 Billion dollars of content revenues worldwide. How big is that? Its as big as the global revenues of the worldwide music industry, or about as much as the total global income of videogaming software revenues. That is MMS, a simple service concept that was launched only eight years ago,

And yes, with 1.4 billion users, MMS alone had more unique users globally, than email has on all platforms combined, including PCs, laptops, notebooks, netbooks, PDAs and yes, mobile phones (like on a Blackberry). I think we have to consider all internet content and apps, not just 'browse' apps and this means we include email use on the 'real internet'. Then consider similarly, mobile-specific messaging services. And MMS is a very valid consideration, if not for 'mobile internet' then certainly for '7th mass media' or 'mobile data' services. When we think of the 7th mass media, while 'mobile internet' browsing on a WAP or i-Mode page may be interesting, a far greater opportunity already exists on MMS multimedia messaging. And as to MMS, you cannot do MMS on a legacy PC, without a separate mobile account with a mobile operator (or some specialist aggregator, who then has a connection to some mobile operator/carrier)

SMS THE GIANT

Then we have the biggest data application on the planet, SMS text messaging. At the start of the year, 76% of all mobile phone subscribers were active users of SMS, and in many markets today, more users of mobile phones send text messages than place voice calls on their phones - in India the ratio is already so lop-sided, that only 70% of phone owners place voice calls, but 90% of Indian mobile phone owners send SMS text messages. Even the USA is catching this trend, thank you to the Obama campaign, and last year was the first year when Americans sent more SMS than placed voice calls on their cellphones, on a national basis.

How much is 76% of the mobile phone user base? It was 3 Billion mobile phone users globally, at the start of this year as reported by Ericsson (and obviously has grown to be far more still, today). Note, that SMS has so many active users, that it is three times as big by users, as the PC based legacy internet!. SMS is twice the size of TV by television sets owned on the planet (there are 1.5 billion TV sets). And SMS is a monster in size of an industry, this year 4.1 Trillion SMS will be sent, worth a 100 Billion dollars. SMS alone, is bigger than all internet narrowband and broadband monthly connection fees put together. SMS is as big as the global radio industry. SMS is as big as all worldwide music sales, all hollywood movie box office revenues, and all videogaming revenues - put together. And SMS was launched in 1993, so this 100 billion dollar industry reached that level in only 16 years. The internet took 35 years to reach 100 billion dollars of total revenues.

And you CANNOT DO text messaging on the SMS standard, on the internet - unless you have a mobile account for your laptop, or you pay some service integrator (who has a mobile account, obviously). SMS text messaging is the widest-reaching media channel on the planet, the widest-reaching interactive channel on the planet, and the widest-reaching PAYMENT platform on the planet. Think American Idol votes. Think ringing tone sales. I do not have the actual count of how many people have made some sort of payment that was billed through the SMS system (as premium-SMS) but televoting and ringing tones are among the most popular of this content. But in many countries like the Philippines and South Africa, SMS text messaging is used to deliver basic news. In Bangladesh, a brand new education system, teaching English via SMS, that costs 'less than a cup of tea per day' had a subscriber base of 300,000 on the day they launched !  SMS is a most powerful interactive system that can collect payments. 46% of the banking accounts in Kenya are mobile banking accounts - using SMS. But just the users of 'downloading paid content' to a phone in 2008 were 1.2 billion people, and those who voted in TV shows using premium SMS were 750 billion people. Another several hunred million people make payments on mobile phones worldwide. Obviously there is overlap, but there is a vast number of people who who only did one or the other. For contrast, the planet had 1.7 billion unique holders of credit cards.

So, the 7th mass media mobile data services environment is far richer and more capable, than attempting to recreate the 'real internet' browsing experience on a phone. We have the 'real internet' of course, and we have the non-real 'mobile internet' which is better; and we have MMS and we have SMS. That is not even touching upon things such as our phone book, the camera, video recording and location-based information. The phone can do far more than a laptop, desktop or even netbook can ever hope to do.

MOBILE HAS 7 UNIQUE ABILITIES

I have explained in my book Mobile as 7th of the Mass Media how mobile has seven unique abilites that no legacy media, including the 6th mass media 'real internet' can match. I list them as - 1) only mobile is truly personal (comes to that unique idenfification of all subscribers); 2) mobile is always carried (we do not carry our laptops to the bathroom and the bedroom - and yes, I know there are some nerds who actually do that, but it is not even 10% of laptop users who do this regularly, while all evidence proves that more than half of phone users carry their phones to bed with them, and to the bathroom with them). 3) Mobile is permanently connected - no other media is on 24 hours a day for most users - but recent evidence shows that we do not even turn the RINGER off on our phones when we take them to bed with us - we now are willing to accept SMS text messages and voice calls even at night in bed. Only on mobile. If you take your laptop with you 'everywhere' it is not connected all the time - unless you have a 3G data connection, in which case you are using it like a 7th mass media connection. Your WiFi connection is not everywhere except for a couple of countries like Singpore and South Korea. For far over 95% of all laptop owners, the laptop is not permanently connected. 4) only mobile has a payment channel (discussed in the above). 5) only mobile is available at our creative point of impulse - so we have our cameraphone, we see a celebrity walk by doing something silly, and we take a picture of it and send it to the local newspaper. Only with mobile. Traditional stand-alone digital cameras number less than 10% of the total penetration of cameraphones.... 6) mobile measures audiences accurately, this is of particular interest to any media and advertising companies, they now use mobile to measure viewerships on TV channels, listenerships on radio channels, even movie audiences in the cinema. And 7) only mobile captures the social context of our consumption. I will discuss this in its own paragraph, as it is the newest and least-understood part of the 7th mass media.

The internet promised marketers the ability to target to a 'segment of one' and to catch 'influencers' from networks, etc. Still today, on such social networking sites as Facebook, or on Amazon etc, we have data mining experts who hope to uncover such details. But as I explained, on the 6th mass media legacy PC based internet, it is not possible to accurately identify most users. When most users are not accurately identified, it means that any measurement of 'who influences whom' becomes pointless, as the data points of both 'influencers' and 'influencees' is greater than their total number. More false positives and false negatives, than real measured data points. It was a good idea, but does not work on the internet overall. It may work on closed systems, like Twitter - ie Klout measures how many people are influenced by you, and how many people you influence, and is reasonably accurate, but only within the Twittersphere. It does not reach the 950 million internet users who are not in Twitter.

On the legacy PC based internet, exactly like with payments and Paypal, you can only handle 'social context' within a small subset of users when they are within a specific service like Twitter, Facebook, Amazon etc. It cannot be done across the whole Internet user base. But... on mobile, the social context can be measured for every user. That means that while the internet promised it but then failed to deliver, only mobile fulfills that promise. Now, why care about social context? We can now accurately measure who influences whom, across all people, and who is influenced by whom. In an age of 'social networking' or 'communities dominate' the brands in the future will seek the opinion and good will of these influencers. And these influencers in turn will learn to take advantage of their influence. It has been argued already, at the Forum Oxford Conference this April for example, that we all have a value to our opinions and preferences, which can be monetized in the near future. What is the value of your expressed opinion? It is approximately 3% of your total annual income... Do the math, and you can see this is a very big number, and for most of the people for most of their professional careers, that number only grows with time....  

Before the 7th mass media, there was no practical way to isolate and identify the social context. Now it is reality, and in many of the most advanced countries in mobile, such as Finland, Sweden, Japan etc, this kind of knowhow is being not only captured but used - with permission of users obviously, and in mostly still small experimental steps - but this is not science fiction, it is reality. As measurements by Xtract revealed, approximately 2% of any group or 'community' or society of shared interests, will be influencing directly half of that whole group. Imagine the power of marketing directly to these 2%. Imagine how much more effective marketing communications can be, if brands talk directly to those who are most influential, whether they like that brand or not. This is as dramatic a global change to advertising, marketing and sales, as the idea of 'segmentation' was half a century ago, when marketing managers were taught not to try to sell one identical service to everybody, but that by segmenting, we could get more profits, by offering variations of a product or service, based on different types of customers, with different needs.

MOBILE HAS NON-UNIQUE BENEFITS TOO

Now, I have written, blogged and spoken about the unique benefits of mobile in just about every opportunity I have had. And I have tried to show that these benefits can bring commercial opportunities as I do regularly on the 7thmassmedia blog. But there are more abilities on mobile which are not unique but give more power, making mobile even more potent and capable as a mass medium than TV or print or radio, or indeed the 'real internet' etc. One is the outputs of the phone. It is easy to look at the phone and think, the screen is so small, mobile must be 'inferior' to a laptop or TV. By that measure - if you really try to argue that the bigger the screen the better the customer experience, today the biggest media would have to be cinema, as it has the biggest screen, and the internet would be bigger than print, because print has no screen. In reality TV is the biggest mass media by revenues, and print is second biggest, and these two are far bigger than cinema, the internet, mobile, recordings and radio. To obsess about screen size is chasing a red herring. Size is only one factor in the screen, and the screen itself is only one type of output. First, on the screen itself - an interactive screen is far more compelling than a passive screen. It is because the internet offers interactivity with its screen, why TV now fears the internet. Note our TV screen is far bigger than our laptop screen. But the smaller laptop screen is threatening our TV experience. Why? Because the internet is interactive, the screen has interactivity to it. We can share videos, we can search videos, we can comment on videos on the internet, but not on TV (or the cinema). And yes, exactly like the internet, we can share videos, search videos and comment on videos - on mobile. So in terms of what kind of screen, interactivity is far more important than size.

But mobile has several other output factors. Mobile has sound - radio has sound, cinema has sound, TV has sound, the internet has sound and recordings have sound - but print does not. This is not an overrding benefit better than all other media, but shared with most and ahead of print, mobile does do sound. Note that not all personal computers do sound. And where some PCs do have sound capablity, it is not allowed to be used, or should not be used, or is even restricted by firewalls etc - in many work related PCs. But a mobile phone very legitimately can have an earphone - and you can listen to sound services, music, news etc - that in some cases of PCs, you cannot use.

Then on outputs, there is vibration. It can be an alert - as we often have when the phone is in silent mode, and it can be part of gaming feedback, like on many Playstation type of videogames in the recordings type of media. But there is no vibration in print, in cinema, in radio, in TV and the internet. Only on mobile and some recordings (videogaming). There are clever services already that offer different types of vibrations to help identify who is calling etc.

Now, I am not arguing that vibration is 'better' than an interactive screen. And I am not arguing that we will all watch movies on the tiny screens of phones. We prefer bigger screens to smaller screens - our home TVs have grown ever bigger with time, as have our desktop PC screens, and until the advent of the netbook, so too were laptop/notebook computers getting ever bigger screen sizes. But I want to point out that standard phones can do more than the standard PCs, and vibration is one of those abilities. Another is TV-out. Not a very common feature, but on smartphones that have it, you get a basic cable that allows you to watch your mobile phone 'small screen' on any big TV screen -far bigger than any laptop, notebook or netbook screen.

But again there is more to mobile. We can rotate the phone, to see a different angle view of the image on the phone. So if you want to see the picture 'upside down' you just rotate the phone. On a laptop, you have to have some picture manipulation software to flip the picture up-side-down on the screen, but try to flip your web page up-side-down on your ldesktop PC screen - hey, thats not easy to do. If its a map, and you want to turn it, thats not as easy on a laptop - but a mobile phone, you just rotate the phone to view the picture or web page or map etc sideways or upside down etc. This is a small thing, not always relevant, but with pictures it is often relevant. And the world's most common type of camera today is the cameraphone.

And we tend to have two phones, and each can be operated on one hand, so then we actually have two screens, both can be independently operated. Watch the live game on one phone, watch the scores of the rival games on the other phone. The phone has all of the same types of outputs as a laptop, but the phone adds more output types or variations or abilities, that the laptop cannot match. I am not arguing that watching YouTube is better on a tiny phone screen than laptop screen - but it can be done. Yet there are in-built abilities on the phone that PCs cannot match. You cannot do vibration feedback for a videogame, on a laptop...

ON INPUTS MOBILE TOTALLY TRUMPS PC BASED INTERNET

But then on the inputs, when we compare mobile the 7th mass media to any of the six legacy media including the 'real internet' on any PC, we have far more inputs. The mobile can take text inputs from a keypad. Many mid to high-end phones have separate inputs on a scrolling device, like a very simplified mouse. These two are better on a laptop or other PC than on a phone. But it is about the extent of how far a 'real internet' PC can go. The mobile has far more inputs. 

The modern phone has a camera. It can take direct input of images and videos. Trying to take pictures with an IP camera on a laptop, outside somewhere is tedious at best. A cameraphone is easy to take pictures. Videos even easier on cameraphones compared to any webcams on laptops. But the best cameraphone users are 'scanner' mode - from scanning pages - that can be identified, and for example translated - to image recognition - Amazon has a service that allows users to recognize books by the cameraphone picture of the cover of the book - to of course QR Codes/2D barcodes. The ability to do data entry on QR Codes/2D barcodes is truly 'magical' where no data entry is needed on a keyboard, and long web addresses can be entered, just by focusing your cameraphone at that little square diagram. On a computer system you can have a separate scanner - but as an accessory. It is not built-in to the device (except perhaps a thumb-print scanner for the security system). Yet most current cameraphones have the ability to scan QR Codes/2D barcodes.

But yes, mobile totally trumps any PC based internet, in inputs. Take location - mobile can accept direct network inputs of where you are, automatically. On the PC you can theoretically do that too - but only if you have WiFi or Bluetooth or some wireless network, and then separately use an application that collects the location. Not on mobile, all networks, all over the planet, can get an accurate fix on every single mobile phone of their subscribers, that is turned on, in a city to an accuracy of 100 meters (300 feet) without GPS enabled smartphones. That means, the accuracy is close enough, to pinpoint what city block you are in. That means we can serve you with a precise-enough map, to show all streets neighboring the city block you are in. For almost all normal needs of a map or navigation, city-block-accuracy is enough for us to find our way.

Can't do location-based services on radio or TV or cinema or print or recordings. Can do in clumsy ways for some users of the PC based internet, but only on separate apps and having the user enable that application (ie turning on Bluetooth and allowing the given service to find its location based on bluetooth positioning). But every mobile phone subscription on the planet is always tracked, whether we ask for it or not. A powerful input.

We can also do touch screen inputs, increasingly smartphones now have touch screens as only or alternate input methods; and we can do sensor inputs, ie movements on a phone like the movements on the gaming console Wii. There are no movement sensors on our laptops, so shaking the laptop will not give you an input.

And we get time input, from the network, accurately. You think - yes, we can do that on the internet - no, not automatically; only if we enable that feature on our PC. Note, on the internet, the only way to collect time input, is if the user turns the feature on; but on the mobile network, it is automatically collected - and cannot be turned off. Even if you somehow disable your clock on your phone, the network will still assign an accurate time stamp to every activity you ever do on the network, all of your calls, all of your messages, all of your web surfing clicks, etc.

We collect automatically the contact of who we call or send messages to.  This is never collected by the internet in its 'native' format, only on given applications - so the email server will collect your email contacts, and the Yahoo service will not share with Hotmail or Gmail to allow a total history of who you sent messages to and who sent messages to you. If you only use one service, for work and home, then yes, an accurate mapping can be made of your email transactions, but that is not typical of most users. And even then, it won't in any way match up with your Skype calls records. But your mobile operator/carrier does collect a complete record of every person you called, and of who called you, and who you sent messages to, and who sent messages to you, all accurately chronicled, so a trivial bit of data analysis would identify if there are some people you return calls to, and who you 'ignore' and not return calls to, etc.

VOICE USE

Mobile services are often designed to have voice controlled parts. These are particularly useful for people who may use a service while driving a car, and does not want to (and it tends to be illegal) to use the keypad while driving a car. And these voice-operated services are for example very useful for blind people, who can't see the screen. But yes, there are lots of services that will read the news for you, allow you to voice-navigate services, etc. This can be done on the internet too, but mostly is not; and can be done on radio or recordings, but not interactively. But is quite common on mobile.

SINGLE HANDED USE

A most powerful ability on mobile, again not unique, is the single-handed operation. The PC based internet totally fails this. You cannot take your laptop from your briefcase, turn it on, navigate to web pages, etc, while having a heavy bag in your other hand, and walking. Yes, we can use a laptop single-handedly, if it is set on something like a table or our lap if we are sitting. But to hold the laptop in the hand, we cannot operate it with the same hand while walking. Now, some other media can be operated single handed - we can read a book single-handed, or a magazine; we can operate the radio (in this case obviously a relatively small radio, haha) or MP3 player single handed. But of the interactive media, only a playstation portable, or mobile phone can be used single-handedly. A laptop, desktop, notebook or even netbook, cannot be operated single-handedly (by normnal, non-acrobatic circus people haha)

Essentially all mobile services, on essentially all mobile phones (except some services on some purely touch-screen phones like say the iPhone) can be used single-handedly. This is very important. It means that we can use the 7th mass media services and applications in far more situations than say a 6th mass media 'real internet' service. For example as we walk on the street. In London they have started to put padding on some traffic signs, as distracted pedestrians walk into the traffic signs, while they are 'walking-while-texting' ie reading or sending text messages as they walk. You cannot send Twitter updates or email messages on your laptop while you walk, if the other hand carries something heavy. But sending text messages - or doing those Twitter updates - easy to do while you walk, with soemething heavy in your other hand. That we can use it single-handedly is also a major reason why we consume mobile content while we consume other media. None of the first 6 mass media is like this. We don't read a book in the cinema. Earlier this year Universal McCann revealed that already every one in seven media minutes consumed in the USA involved mobile. We vote while watching TV, we send comments to our newspapers, we even comment on movies from the cinema as the end credits roll - telling our friends whether to go see that movie or not. Only mobile is used together with every other of the seven mass media. Mobile is unique.

MOBILE IS DIFFERENT AND YES, IT IS BETTER

I hope that this long posting has opened your eyes, and proved to you, at least that mobile is different from the legacy PC based internet. I hope you accept, that there are lots of things we can do on the mobile services environment, that are not possible on the legacy PC based internet - we can identify all users on mobile, we can handle payments for all users natively on the network on mobile, we identify their location for every user, etc. We can offer better inputs and outputs than the PC based internet, if nothing else, we can do the shaking of the phones for inputs, and take vibrations as outputs, something no desktops or laptops do. It does not matter if this is a 'huge economic opportunity' or a tiny one - look at the Wii gaming console, with their sensors they created wholly new videogaming opportunities that the PS3 and Xbox could not match. It is up to creative service development now, to invent cool new services for us, utilizing the new abilities of mobile, just like Google Adwords managed to combine search with advertising - something that was never even considered for radio or newspapers or music records.

I hope you can accept that the 'real internet' is inherently different from the 'mobile internet'. I would argue that the best platform for the legacy PC internet is the PC environment, and we should let the old-fashioned advertising-driven legacy internet live on that platform. I think it is quite futile to try to bring the 'real internet' to mobile networks and smartphones. The legacy PC internet needs its advertising ecosystem to drive some revenues, so some content providers can make some money. We on the 'mobile internet' have far better revenue opportunities, and should not bother to try to fight for that 'real internet' ad slice. Let them have it, let them do 'free internet' just like libraries do 'free books'. The far bigger opportunity is where buyers are willing to pay. Just because there are libraries, did not stop sales of books to be far bigger than books read in libraries. 

I think we have a far better opportunity developing better mobile internet services, and making sure their prices are not prohibitive but more importantly, the 'mobile internet' services to be re-designed for the small screen experience. I am sure many will not accept that the tiny screen usage-priced 'mobile internet' should prevail on mobile devices, but that ship has actually sailed, and the younger 'mobile internet' does already have more users than PC internet. The reason you the reader may not have noticed it, is that this is a phenomenon driven by Asia and Africa, but it is a global trend.

It is however completely beyond question, that total devices in use, that can do browsing on basic WAP level, exceed all PCs that have browsers, by 3 to 1. It is also increasingly accepted that more people use browsing services on mobile phones globally, than on PCs. It is undeniable, that content revenues on mobile browser (including WAP) services far exceed those of the PC based internet. It is beyond any doubt that more people use messaging on a phone than on a PC. For interactive mobile services, more devices, more users and more revenues are on mobile than the PC based internet. This all happened in the past few years. I ask you to accept the facts of the world, not hold onto outdated views from the past. There was a time when the internet was not on PCs, but was on mainframe computers. Now we are witnessing another similar shift.

Finally I want to make a point that the 7th mass media experience is far more than 'browsing' the 'mobile internet' on a phone. It includes MMS, pictures, sounds and video on multimedia messaging, used by 1.4 billion users, and yes, SMS text messaging, used by over 3 billion people on the planet. That is why I obsess about the 7th mass media, not about the 'mobile internet' because I can see that far more people consume media content and express interactivity on MMS and SMS, than consume 'browser-based' content and services on a phone. The mobile content, services and applications opportunity on the 7th mass media channel is truly huge. This year 2009, mobile data services will deliver more than 200 billion dollars of revenues. The exact level of how much beyond 200 Billion dollars is not yet sure, but it is likely, that 2009 becomes the first year, when total mobile data revenues grow past total legacy PC based internet revenues, counting all internet content revenues, plus all internet advertising revenues, plus all internet broadband access revenues, plus all internet dial-up access revenues, put together. Mobile data is far younger, and about to become far bigger than the internet based revenues. Lets not treat the 'mobile internet' or the 'mobile data' or '7th mass media' business as the dumb little brother of the 'real internet'.

There was a time when a new technology was called a 'voice telegraph' but we no longer consider telephones to be 'inferior' telegraphs. Same for the 'picture radio' we now do not call the television an inferior radio. There was a time when cars were called 'horseless carriages' and yes, early such things were considered inferior to horse-drawn buggies. Today nobody would think of trying to fit a 'real horse' into the engine bay of the car, to replace the piston engine that does 100 horsepower. Its time to stop thinking of mobile data as an inferior internet. It is different, mobile as as different from the internet, as TV is different from radio. And just like TV rapidly grew to be bigger than radio, we are about to witness mobile data growing to be bigger than the internet. Please look at this opportunity with open eyes, and you will find fantastic opportunties in it for you. Every economically viable person on the planet has a mobile phone, there are 4.6 billion mobile subscriptions on the planet today, reaching two thirds of the planet. Only one in six people has access to a personal computer.

And yes yes yes, I have of course a 2 page freebie document for you, if you'd like to have a simple pdf document to share with your collegues. It does not cover all these points, obiously, but it does go thought the seven unique ablities of mobile. It is called the Tomi Ahonen Thought Piece on 7th Mass Media. If you write to me, at tomi (at) tomiahonen (dot) com, I will send you the thought piece by return email.

Celebrating 30 Years of Mobile Phones, Thank You NTT of Japan

December 1, 1979, 30 years ago, the world's first mobile phone network was launched into commercial production. No, this was not the famous phone by Dr Martin Cooper of Motorola who is so frequently, but mistakenly credited for starting this industry. Four years before the first Motorola DynaTac phones were sold by Ameritech in Chicago, the Japanese had already been offering full mobile phone services in their country. As we now approach December, I want to take this moment to reflect on that immense invention and bold moment, and also celebrate several other major milestones that we can thank the Japanese telecoms industry for bringing to us.

Our regular readers know that I am an ex-Nokia guy and I come from Finland, so often this blog, and my books reflect an unfair balance of over-emphasizing the contributions of Finland and Nokia, and unfairly under-emphasize the contributions of other countries and companies, in particular those of Japan and NTT DoCoMo. I hope in a small way to correct that today, and will go on record to state, that the country that has given most to the mobile telecoms industry is, by a huge lead, Japan; and of many innovative companies in Japan, the one that has single-handedly turned a potentially niche geek market into a massive global giant, has been NTT DoCoMo.

And yes, I hope many will write celebrations and tributes to the mobile phone around December of this year, and wanted to provide the facts of when things happened. And to get the basics right, this industry was launched in Tokyo Japan, not Chicago USA.

Go get a cup of coffee, this will not be brief, but I think I will surprise you with some of the stories that came from the land of Nippon.

FONZIE, ABBA AND MORK FROM ORK

1979. Thirty years ago. The movies frightened us with the China Syndrome of what might happen in an accident in a nuclear powerplant, and then Three Mile Island nuclear power plant in the USA did have a nuclear accident. On TV Dallas was the big hit globally, while we laughed at Fonzie in Happy Days and the alien Mork in Mork & Mindy. Serious movie fans flocked to Kramer vs Kramer and Manhattan. Space was big in the movies, as Alien scared us, and James Bond made his sad space adventure in Moonraker.

Margaret Thatcher had been elected Prime Mininster of the UK, the Ayatollah Khomeini had taken over the rule of Iran, and peanut-farmer president Jimmy Carter was getting deeper and deeper into trouble with inflation, high oil prices and a hostage crisis - in Iran. The Soviet Union invaded Afghanistan, to be entangled in a decade-long quagmire battling something called the Taliban. And in Iraq, a military coup put a young officer in charge by the name of Saddam Hussein. Meanwhile a second-rate actor was suggested as a long-shot to perhaps become the presidential candidate of the Republican Party, a guy named Ronald Reagan, known for movies such as acting with a monkey in Bedtime for Bonzo.

On the airwaves it was the time of disco, with Donna Summer singing of Bad Girls, Earth Wind and Fire taking us to Boogie Wonderland and Sister Sledge telling us We Are Family. Anita Ward asked us to Ring My Bell, while the Village People took us to YMCA. Even rocker Rod Stewart was into Disco asking Do Ya Think I'm Sexy. While some classic rock was also born, from Pink Floyd's the Wall album and its anthem, Another Brick in the Wall, to the Knack singing of My Sharona, Blondie releasing Heart of Glass, to Queen telling us to Don't Stop Me Now.  And yes, of course there was all that Abba on our radios from Gimme Gimme Gimme to Voulez Vous.

30 years ago there was no CNN, there was no MTV, there was no Playstation. Madonna had not released a song yet. There was no digital music, no CDs. Movie rentals were on video cassette, not DVD and we had a format war of Betamax vs VHS. The internet had only 200 connected computers, all mainframe computers at this time. The personal computer was five years old and IBM had not bothered to release a PC. This was the context of 1979.

 


(this picture is from the launch time, and is at the NTT History website at this link picture first mobile phone service NTT 1979)

It was December 1, 1979, and Japan's national monopoly telecoms operator/carrier, NTT, launched the world's first mobile telecoms service commercially, with a fully functional network covering the 23 districts of Tokyo to start with, and by 1984 would offer national coverage across all of Japan. The early phones were carphones and cost thousands of dollars, a sign-up fee (remember those?) of several thousand dollars and a minimum monthly fee of about 250 dollars. Plus voice minutes costing two dollars per minute. These new mobile phones were seen by all experts and analysts including management at NTT as only a niche product for the wealthy and powerful. But that was the starting point.

This blog will celebrate some of the major contributions of the Japanese mobile telecoms industry from that point on, with some context and numbers to illustrate the relevance.

1G ANALOG CELLULAR

So yes, December 1, 1979, NTT of Japan launched initially for the Tokyo metropolitan region, the world's first commercial mobile phone cellular telecoms network, consisting of 88 cell sites (base stations, or "radio towers"). This was a 'cellular network', with 'handover' and on an automated system ie the caller just dialled the number, and no human switchboard operator was needed to connect the call. Previous carphone systems existed in many advanced countries, but never had all three elements, so for example Ericsson had an automated non-cellular carphone system out of Sweden, while Finland had a nation-wide cellular system on ARP technology which did not have handover, and was no automated.

This NTT system, is genesis. It is what we now call a first generation or 1G mobile network. It was an analog system and still with phones big and batteries weak, these were mostly carphones, but soon also 'luggable' portable phones emerged, suitcase/briefcase sized monster-heavy phones, with shoulder-straps, weighing about 10 kg (22 pounds) that did allow callers to bring their phones with them. By the middle of the next decade, hand-held phones would appear in short succession in America, Europe and Japan.

While the utility of a mobile phone was obvious, the early costs and size issues prevented mass adoption. In Japan it would take about 15 years to connect the first one million users to the network. As prices would come down, in the second 15 years they would add a hundred million more.

In 1981 the innovation spread, and early 1G networks started to emerge in many countries in addition to Japan, first in the Nordic countries of Denmark, Finland, Norway and Sweden on the NMP standard and then rapidly in many countries from the UK to Mexico. The USA joined the growing list of countries with cellular mobile phone services quite late, on October 13, 1983 when Ameritech launched their commercial service in Chicago.

FIRST 10 YEARS, 4 MILLION

It was slow going, by the time the industry was ten years old, in 1989, we had only 4 million mobile phone subscribers in the world. In terms of total penetration rates, the cellular phone was strictly an expensive executive gadget, for busy businesspeople only. The networks were mostly city-networks, so you pretty much expected that as you drove into the suburbs and away from the city, the network would disappear and you would not get a cellular phone signal. Phones were still very expensive, cost more than a thousand dollars each, and voice minutes cost over a dollar per minute and a good phone would not last half an hour of talk-time. In terms of human penetration levels, after ten years, there was a cellular phone for well under one tenth of one percent of the total population of the planet. Or in other words, one cellular phone for every one thousand people. An interesting gadget perhaps, but definitely not a mass market device, its market penetration was only a tiny 'niche' and the gadget was strictly for the exclusive few, and the very rich.

SECOND TEN YEARS, 740 MILLION

But phones kept getting smaller and the services more affordable, and the first analog 1G mobile phone networks gave way to digital second generation mobile phone 2G networks from 1991, and by 1999, at the 20th year anniversary of mobile phones, the world had 740 million mobile phone subscriptions in use, and globally one in eight humans had a mobile phone, or global penetration rate was at 12% of the human population. Some were even suggesting one day there would be more mobile phones than fixed landline phones.

On a global basis, that number of mobile phones by 1999 was now bigger than the number of personal computers in use, more than total automobiles registered and far bigger than the number of internet users. But still, mobile phones were far off from the most widely spread technologies of the planet, fixed landine phones, TV sets and FM radios.

That 12% global penetration rate was of course not uniformly distributed. The 5 billion people living in the developing world had almost no mobile phones far less than 5% penetration rates, but in the most advanced markets, like Japan, Finland, Sweden, Norway, Hong Kong and Singapore, the mobile phone penetration levels were passing 60% national levels and Finland became the first industrialized world nation where the number of mobile phone subscriptions grew bigger than total fixed landline phones. An enormous change was happening and early evidence of it was starting to emerge in those most advanced markets.

TODAY 4.6 BILLION

Fast forward to today, and in December 2009, thirty years later, mobile phone subscriptions have reached 4.6 Billion people, and there is a mobile phone subscription for two thirds of the planet. Even in the developing world there is more than 50% penetration rate with mobile. We are now adding half a billion new subscribers per year, and the industry sells over a billion new phones annually. Mobile phones have become the most widely spread technology on the planet, with more phone subscriptions than landline phones, more than TV sets, and more even than FM radios worldwide.

If we plot the growth of the industry, in terms of customers, the mobile industry grew at a sustained compound annual growth rate of 130% for the first whole decade (ie more than doubling every year) up to 4 million users; then at the breathaking rate of 68% annual growth rate for its second decade to 740 million users, and now still an amazing 20% rate this third decade to reach 4.6 Billion users.

For contrast, the landline phone business took over 120 years to reach 1 billion subscribers. Radio achieved a billion receivers in use in about 80 years. Television took 65 years to reach a billion. The internet took 38 years. Personal computers reached a billion units in use in 33 years. But mobile reached a billion users worldwide in just 22 years.

And if we think of a Trillion dollars in annual revenues, Mobile achieved that enormous milestone level last year, in 29 years (with 800 billion in service revenues, and 200 billion in phones and equipment sales per year). The landline phone business never did hit a Trillion dollars in annual revenues. Neither did radio. Neither did television, come to think of it. And the internet, is a far cry from a Trillion at less than a quarter of that size. Not only is mobile telecoms a giant in terms of users, but it is also the monster in terms of total worldwide annual revenues, as an industry sector. What is more, over the past year, while the global economy shrunk, the mobile telecoms industry still grew subscribers by 15% and grew revenues by 8% WOW! What a healthy, dynamic, robust, powerful industry. Thank you NTT.

THE MOBILE INTERNET

That NTT Nippon Telephone and Telegraph company was privatized and then it spun off its mobile division, which was branded NTT DoCoMo. But this young hungry growing company has continued with the innovations for this industry.

On the eve of the 20th anniversary of mobile phones, 1999 saw perhaps the most important innovation to this mobile telecoms industry, when NTT DoCoMo launched the world's first dedicated mobile internet service package. This is what we might think of a 'portal service', in what they called i-Mode in Japan. This was a radical innovation, and industry-shattering. They brought an internet-like experience to phones, but with many gigantic improvements. The most obvious is that every item or service on the i-Mode service can be billed for (while you may think, 'we can do that on the internet as well' - that is not true. None of the content on the internet can be billed through the internet. You have to set up a Paypal account, only about 10% of internet users have one, or you have to provide a credit card etc. But on the mobile internet, all you need is a phone account, and you can pay. This is a radical improvement over the legacy internet).

This was the birth of the money internet. Every officially authorized content brand or provider on i-Mode had an automated billing relationship by which they could charge micropayments and get customers to pay for content and services, typically charging 100 to 200 Yen per month - roughly between 1-2 dollars.

MOBILE INTERNET USE STATS

And ever since i-Mode, Japan grabbed and has held the lead in global statistics for mobile internet use in the Industrialized World countries, whether in proportion of internet-capable handsets; or percent of mobile subscribers to the mobile internet; or total mobile internet traffic; or the shift from the PC based internet to the mobile internet. So if you think the iPhone is cool in causing a shift from laptops to the iPhone, that phenomenon was first observed in Japan.

To illustrate how these matter, since 2006, the Japanese regulator has reported that the majority of all internet use is from mobile phones, not from personal computers. And what of usage? Since 2008, the Japanese regulator reports that the majority of internet use has shifted also to mobile. So in Japan, obviously all internet pages are by default formatted for the small screens of mobile phones.

So how did this "another crazy Japanese innovation" fare in the rest of the world? Yankee Group told us earlier this year, that 29% of all mobile phone users on the planet now surf on mobile web pages. So at the start of this year, it meant there were 1.1 Billion users of the mobile internet worldwide (if the same rate holds, that is 1.3 Billion active users of the mobile internet by the end of 2009), and yes, that means there were more users accessing browser-based content on a phone, than the total population of internet-conneced personal computers on the planet. In just nine years, the 'pocket' internet had grown to have more users worldwide than the 'original' PC based worldwide web. Remember the PC based equivalent, the Worldwide Web, was launched in 1989, onto a platform of the internet, to an established base of personal computers. It took the WWW 17 years to pass a billion users. The mobile internet reached a billion users in almost half the time.

MOBILE INDUSTRY BUSINESS MODEL

But if the prototypical mobile internet service, i-Mode was a radical innovation, the parallel introduction of a new mobile internet business model was pure genius. NTT DoCoMo said they would pay back 90 cents out of every dollar to the content owners of any mobile service, content or application, when charged through the i-Mode service. So if a Disney screen saver cost 200 yen, about 2 dollars, then Disney would get 1 dollar 80 cents, and DoCoMo would only charge 20 cents for that billing transaction. Fast forward to today, and Apple is cheered by applications developers, for its developer-friendly revenue-sharing model, where Apple takes 'only' 30 cents for every dollar charged on an application sold through the store. NTT DoCoMo a decade earlier already offered a far better deal to content owners and developers.

At this time most carriers/operators around the world were thinking the business model on the emerging mobile internet would be a 50/50 split. But the industry leader NTT DoCoMo boldly promised a 90:10 split. Content owners and application developers and various partners flocked to the i-Mode service. The backlog for accepting new partners grew to even 3 months at DoCoMo as tens of thousands of Japanese internet companies wanted to get authorized to become official i-Mode partners. Wired magazine reported in 2001 of the first profitability turnaround, of the famed loss-making Japanese internet giant, Cybird, as having turned profitable suddenly, only through its mobile internet arm. Hundreds, thousands were to follow the same success story.

The i-Mode revenue-sharing model was instantly copied in Japan by the two rival networks, KDDI and J-Phone (now Softbank). Then in neighboring South Korea and Taiwan, very similar models were adopted with carriers/operators there soon offering about 85:15 or 80:20 deals. In Europe in the most advanced markets like those in Scandinavia, soon similar deals in the 75:25 range or 80:20 were offered. And mainstream Europe was moving away from 50:50 deals to more like 60:40 and 70:30. Not surprisingly, the more friendly the revenue terms were for the content providers, the bigger the mobile internet success and adoption was in that country. Japan continued to lead and South Korea in a solid second place, but advanced parts of Europe where deals were better than 70:30 would also show very strong mobile internet adoption.

MOBILE EMAIL

Now, many applaud RIM for bringing email to mobile phones with the full solution, of the email servers, etc, optimized for mobile use. RIM did do that, for the Western markets of North America and Europe. Again, Japan was there before, and this innovation too has to be credited to Japan and NTT DoCoMo.

So today, if you ask a Japanese if they would want to have email on a PC, they will first say, oh, I didn't know you could do that - as they obviously will all use email on their phones. And then they will ask - why would you want to have email on a PC? Think about it, if everybody had a Blackberry, then why would anyone really want to use a PC for email.

MOBILE BOOKS

There is so much to the mobile innovations from Japan, one I want to mention is mobile books. Yes, books that are consumed on mobile phones. Most who have not heard of this, are usually laughing that it cannot possibly take off. Yet in Japan last year, nearly half a billion dollars worth of mobile books were sold (and yes, just earlier this week stats from iPhone apps revealed that books now form the biggest part of 'applications' on the apps store, bigger than games, in terms of titles offered, so don't laugh. Mobile books can be huge).

Back to Japan. Big? Mobile books outsell eBooks by 8 to 1. There are so many compelling reasons why printed text delivery of 'book format' works better on a phone than in traditional printing, in the whole value system of book selling, that all major global booksellers have rushed into this idea. Even me, a tiny private publisher of 3 electronic books, I made them mobile books, readable on smartphone screens.

But here is the truly weird part. Most of the mobile books are youth-oriented books, ie youth novels, young girl falls in love with married man, he won't divorce his wife, she gets pregnant, gets a sexually transmitted disease, commits suicide. You know, youth novels, very predictable storylines, simple characters etc. And written by the youth! What is worse, most mobile books out of Japan have actually been written on mobile phones!

Talk about repetitive thumb syndrome.. but this is the same generation that walks around with Playstation Portables and send 100 short messages every day and update their Facebook accounts whenever they go to the bathroom etc. They are totally comfortable with the small screen and keypad of a modern phone, and think nothing of turning their private diary or blog into a book - especially if some real book publisher is willing to pay them for that. And for the book publisher, it is a trivial cost to publish books on mobile, and minimal risk. If the young author is successful, then the books get printed also in paperback format. A true revolution for the 1st mass media channel, print and its oldest format, the printed book. And this too came from Japan.

MOBILE ADVERTISING

And where there is media, there is advertising. There were many independent web services on the mobile internet that had some kind of advertising models. But then NTT DoCoMo took the fledgling tentative experimental industry, and turbo-charged it. Japan saw the first national giant ad agency dedicated to mobile advertising, in D2, the 50/50 partnership between NTT DoCoMo the biggest mobile operator of Japan, and Dentsu, the biggest advertising agency of Japan. Today Japan's mobile advertising market is both the biggest in total revenues, and most innovative, and D2 has been a major force in enabling that. Japan was the first country to launch engagement marketing concepts on mobile, stuff that Alan Moore and I wrote about in our book Communities Dominate Brands in 2005. Most of the innovative ideas of mobile advertising globally have come out of Japan. Thank you Japan.

THIRD GENERATION

Most of you reading this blog are employed adults working in the media, IT or telecoms space, and will have an advanced mobile phone in your pocket. You may not even have noticed, that you migrated to the third generation recently. Most smartphones today, including the iPhone, the Blackberry, and of course the main top-end phones from Nokia, SonyEricsson, Samsung, Motorola and LG tend to be 3G phones. Your N-Series or E-Series Nokia are 3G phones. And you might not even notice, that often when you make voice calls, those are handled on the 3G network. And most of the time when you access Google or your email or get the sports scores, weather report or stock market update, you are actually using the 3G network. More than half of all mobile phone users in Europe and advanced markets of Asia now have a 3G phone on a 3G subscription. This mostly silent revolution has been the rapid expansion of the 3G technology. And once again we go to Japan.

On October 1, 2001, NTT DoCoMo used the WCDMA standard to deploy 3G commercially and the era of the third generation of mobile formally commenced. By the end of the year South Korea had launced commerically on the rival CDMA2000 EV-DO standard, and within a year, Japan had all three networks with their 3G networks in commercial production. Europe would have to wait until March of 2003, when Italy and the UK received their first commercial networks on 3G. The US had its first commercial network on 3G, Monet, but that went bankrupt and the first viable 3G network in North America would be that on Verizon a lot later.

While the technology press obsessed about such technologies as the iPod, the Blackberry, the iPhone and the PlayStation Portable, a 3G revolution silently took over. Today the installed base of 3G phones is at over 800 million in use, and of paying subscribers on 3G telecoms price plans and subscriptions, we are at about 600 million customers who pay for 3G access, and who produce annual revenues of about 325 Billion – yes that was right – 325 Billion dollars of annual revenues. Abi Research has estimated that this year 2009 will become the first year when more 3G phones are sold worldwide than 2G phones and my consultancy, TomiAhonen Consulting tracks the revenues and projects that within wo years half of all mobile industry service revenues will come out of 3G. Thank you Japan!

CAMERAPHONE

While NTT DoCoMo was very visibly launching 3G, its smaller Japanese rival, J-Phone (later brought by Vodafone, and then sold to Softbank), was developing a technology innovation that would have an even wider impact than 3G, the cameraphone. The idea at first seemed quite bizarre to even the most friendly enthusiasts, and seemed positively suicidal to most analysts. A completely 'only in Japan' type of innovation that could not spread beyond the island nation. Cameras were mostly still film-based in 2000, and still most mobile phones in use in most big countries like the USA were analog phones of the first generation. The screens of most phones were tiny and only text-based, in monochrome. Who would want to view any pictures on those? And the early cameras were even worse – the first cameraphone by Sharp, that J-Phone released, had a resolution of 0.1 megapixels, yes you read me right, not 1.0 megapixels, but 0.1 megapixels. 300 pixels by 300 pixels. That is literally the size of a postage stamp - a small postage stamp. But still, J-Phone believed this would be popular with consumers, and with a handset manufactured by Sharp, released the first consumer cameraphone in November of 2000.

The early phones and digital cameras had very little overlap. The camera needed its lens and shutter and sensor construction, none of which were parts of a phone. And the camera needed a big screen, in color, and a lot of memory to store the images – pictures were far more memory-hungry than the phone numbers we stored in our phonebook. Meanwhile the mobile phone was shrinking and becoming overloaded with electronics, calendars, clocks, basic video games like the Nokia Snake. The battery life was a problem as was CPU processing power. Meanwhile the big cameramakers like Nikon, Minolta, Canon and Konica, were releasing 'proper' digital cameras with camera resolutions of 3 megapixels, even 5 megapixels.

But despite all the conventional wisdom, cameraphones took the world by storm. By 2004, just three years later, cameraphones already sold more units than stand-alone digital cameras by the big camera makers. By 2006 more cameraphones sold than stand-alone digital cameras and film-based cameras combined, and since then pioneering  giants of the camera industry, Minolta and Konica, have pulled out of the business. Today about 2.5 billion cameraphones are in use, and for almost all of the planet, the only camera type owned is a cameraphone.

If you want to track a truly breathaking spread of a new technology, consider that of the cameraphone. TV took 65 years to reach a billion receivers in use. The personal computer 33 years, the mobile phone 22 years. But cameraphones reached a billion devices in use, in only 7 years. Domo Arigato Japan!

SHA-MAIL

A related innovation was also introduced by J-Phone, the picture message. What we mostly know as MMS multimedia messaging, was originally offered in Japan by J-Phone as 'Sha Mail' and also dismissed as a crazy idea. Yet as cameraphones spread, and being connected, they did open the door for new communications sending pictures. Today picture messaging has 1.4 billion users worldwide - yes that is more than all users of email globally, and in advanced markets like Norway the usage has passed the level of one picture message sent per week (four MMS per month) across the whole subscriber base nationally. Globally picture messaging delivers over 25 billion dollars of service revenues to the mobile telecoms industry and MMS seems particularly suited as an advertising media channel. Were it not for the immense success of SMS text messaging, we would hail MMS as a massive global success in only eight years.

LOCATION-BASED SERVICES

While NTT DoCoMo was launching 3G, and J-Phone were merging cameras with phones, the third Japanese mobile phone operator/carrier, KDDI saw its opportunity in location-based services (LBS). They observed that many Japanese who commuted to work would tend to do most of their shopping and other chores near the two train stations either the one at home or at work. And the cellular network offered even back in 2001 accuracy to the degree that you could position phone users by a network cell radius, that was roughly the reach of the shops, restaurants and offices near any train station.

KDDI deployed their first LBS solutions to give localized advertising and information, essentially for all within walking distance of any one train or underground station. And in the process they embarked upon a journey into LBS that has produced the most amazing location-based service portfolio with the best reliability and accuracy, on the planet today. Their mapping solution called EZ-Navi is so detailed today, that all of Tokyo's buildings have been rendered in 3D, so the service can not only show you a map pinpointing where you are, but show the whole street view in 3D images, so you can see which building is where... 

KDDI has been a continuous journey of service improvement. They were the first to offer GPS based mobile phone navigation as far back as in 2002. Their service portfolio is second to none. The LBS services soon included parcel tracking, friend-finding, personalized weather, tourist guides and yes, location-based advertising. And games, lots and lots of location-based games, with the location-based treasure hunt Mogi as the most widely referenced. Alas, inspite of all the enormous expenditure in the perfection of the technology, LBS has not proven a commercial hit, and while an interesting innovation, and copied in almost every country and every network, the location-based services turned out to be more of an illusion of promise, than any commercial success.

APPS STORE

The hot new story in the tech and telecoms press today is "Apps Stores" after Apple released their iPhone oriented mobile data applications shop in June of 2008. Since then there have been a whole slew of apps stores including those, some by handset makers like Nokia Ovi or RIM Blackberry, some by operating system like Windows Mobile and Google Android, yet others by mobile operators/carriers like Verizon and China Mobile

It would be easy to think this was an Apple invention, but once again, we need to look to the Land of the Rising Sun. It was yes, Japan, and NTT DoCoMo who launched the first applications store for mobile phones, branded i-Appli, all the way back in 2001.

WIFI

Do you like that WiFi connectivity on your smartphone? Many in America first had WiFi on their phone with the original iPhone in 2007. Europeans had their first WiFi smartphone back in 2005 with the 9500 model of the Nokia Communicator. But the first in the world to embed WiFi on a mobile phone was NTT DoCoMo who did it for their premium business phones already in 2003.

VOIP

Do you use Skype? Want Skype on your phone? Yes, that is now becoming possibe on some networks in some countries. Who had that technology first? It is called VOIP Voice Over Internet Protocol. The first mobile phones and service using VOIP comes from Japan. It was KDDI who launced it in 2005, branded as "Metal Plus".

REAL TONES

Felt the ploink-ploink sound of basic ringing tones is 'not real music' and you want to hear Shakira or the Black Eyed Peas or Camillionaire or yes, Abba on your phone? That idea to take real samples of real songs, and using those as ringing tones is what the industry calls 'true tones' or 'realtones'. Who did it first? The Japanese. KDDI released their first Chaku-uta real tone ringing tones and compatible handsets in 2002.

FASHION PHONES

Did you notice that fashion brands are rushing to release branded phones? Armani, Prada, Dolce & Gabbana, even watchmakers TAG Heuer are releasing branded phones. Who can we thank for this innovation, to bridge fashion with phones? Not the iPhone. That was NTT DoCoMo with the first Benetton branded phone in 2005.

QR CODES

If you are in the advertising industry you probably have heard of the QR Codes or 2D barcodes, square squibbles that look a bit like an out-of-focus thumb print. They are now appearing all over the planet in innovative ad campaigns. A new way to jump to web pages without any typing, using a camera phone. They say this is the next big thing in consumer interactivity. Who can we thank for this? The Japanese. NTT DoCoMo launched QR Codes in 2005 and I was very privileged to be one of the first Westerners to see this technology even before it had launched, on a private screening by my dear friend, then with NTT DoCoMo's London office, Voytek Siewierski. He said I'd be impressed, and boy was I. I liked it so much that since 2006 I have had the 2D barcode on my business card 'just like Japanese mobile industry executives' haha.. By the way, in just two years from launch, over half of Japanese were using the feature, and in three years, it had shot past three out of every four mobile phone owners. Expect this to really become big in your neck of the woods as well.

FELICA

And if you believe your money is shifting from your wallet and credit cards, to your phone, like 46% of banking accounts in Kenya already are mobile accounts, then you probably also can foresee a future of the "mobile wallet", where our phone is not just our communications and media and memories, but also our cash, our bank account, our credit card; but also collecting our loyalty card points for our purchases and our frequent flier miles for our journeys; and furthermore to be our integrated identity card, our passkeys to work and digital keys to our home door locks. That mobile wallet concept is becoming reality in many of the most advanced markets such as South Korea and yes, Japan. The world's first commerically launched full mobile wallet service is called O-saifu Keitai, and yes, it was launched by NTT DoCoMo in 2004. Part of that is the FeliCa payment system, which you can use in tens of thousands of points-of-purchase all over Japan.

IDLE SCREEN LIVE CONTENT

Wow, how could I forget this? After I posted this blog I attended the GSM Association Mobile Asia Congress to present, and saw presentations by the CEO's of NTT DoCoMo and Softbank. These presentations reminded me of two more huge innovations from Japan that need to be added. Idle Screen. NTT DoCoMo pioneered the live content news feeds to the idle screen of the phone. They call it i-Channel and have launched it now also in India on the Tata network where the most popular content is Cricket Scores. Other markets have copied the idea too, but the first idle screen news feeds were from NTT DoCoMo.

FLAT RATE PRICING

And flat rate pricing. Where would Apple's iPhone impressive mobile internet use be, if it wasn't for flat rate pricing. But that was not an AT&T or Apple invention, no that idea traces its roots to the KDDI network in Japan early in this decade. Flat rate pricing, how could I forget that.

CAMERAPHONE TRANSLATOR

When I visited Japan on one of my many visits, my dear friend Lars Cosh-Ishii of Wireless Watch Japan (and Mobikyo, and MoMo Tokyo) showed me the Cameraphone Dictionary. At the time it was a radical high tech solution, using the cameraphone to scan images of any printed page in English, and momentarily, displaying the same page, translated into Japanese, on the cameraphone screen. Cool. Super high tech. Yes, today this idea is copied many times over, but this kind of innovation is coming from Japan all the time.

CONNECTING PLANTS

How far can it go? I just blogged a couple of months ago, about a new Japanese service provider, AgriHouse, who offer a gadget that lets your plants communicate with you, when they need water, they send you a message to your phone. Connecting plants! No, not connecting plants, translating plant needs into human communications, wow, this is cool.

The mobile phone is the most widely spread technology on the planet. It is our voice calls, our text messages, our Twitter and Facebook updates, our YouTube viewer. It is our camera, our video recorder and image viewer. It is our web browser, search engine and breaking news resource. We get advertisements and coupons on it. We use it to store our critical phone numbers, our anniversaries and birthdays, addresses and all sorts of personal information from banking passwords to health data. The phone has replaced our wristwatch. We use it even as our alarm clock. It is the last thing we see when we go to sleep, and it is the first thing we see when we wake up.

Mobile is such a compelling media, that over half of us now sleep with the phone ringing turned on at night, so mobile can literally reach us even when we sleep. No, I will call your "sleep" and raise you "death". Yes? We reach dead people with mobile? Kind of. Follow me on this. Japan became the first country where they now offer QR Codes used on grave stones in cemetaries. So now, the dear departed can have mobile internet pages made in their memory. You can access the pages when you are at the graveyard, and you can leave your thoughts and prayers and greetings, via your phone of course. Only mobile allows us to connect plants, to reach us when we sleep, and yes, even let our loved ones connect with our memory, after we have died. What a technology!

TRANSITIONS

Thirty years ago we said goodbye to an automobile industry icon, when the original VW Beetle stopped production. Another icon the sporting legend Muhammed Ali announced his retirement from boxing. On TV we said goodbye to Battlestar Galactica, and saw the last season of John Cleese as the bumbling hotellier of Fawlty Towers. This was the last year the original three Charlie's Angels were together. It was the last time we saw the most invincible Bond Villain, Jaws, - remember that giant with the metal teeth - on the silver screen.

Still through all of that, Gloria Gaynor consoled us, as she sang, I Will Survive. But there were transitions into something new, like Archie Bunker went from All in the Family to Archie's Bunker's Place, and SOAP spawned his own series for the sarcastic butler Benson. Previous superstar TV icons went to the big screen, with Star Trek, Superman and the Muppets all having their first movies out that year with countless sequels to follow. Sigourney Weaver would create her iconic Ripley to play against that iconic Alien monster in so many space monster remakes. And a successful pop quintet had a stunning break-up when their youngest member of the Jackson 5 decided to go solo and we heard Michael's hit Don't Stop 'Til You Get Enough. That year, 1979 was the commercial break-through of rap music, when Sugarhill Gang gave us Rapper's Delight (sampling the earlier hit of the year, Chic's Good Times). And they thought rap music was only a fad..

Meanwhile an iconic personal entertainment gadget was born with Sony's Walkman launched in Japan, as well as the first videogame cultural icon, Pac Man also first appered, initially in Japan in 1979. And NTT launched commercial mobile telecoms as an overpriced executive carphone service. December 1, 1979, 30 years ago. Who would have thought that the most influential change of them all, was that last one. Mobile phones. We cannot imagine life without them anymore.

The Digital Divide in Numbers: TVs, PCs, Internet users, Mobile around the world

I have increasingly been focused on the mobile and digital opportunities in the Developing World (or perhaps should be called Emerging World). I mean the over four fifths of the planet that was not lucky enough to be born into Europe or the USA and Canada, or Oceania, or any of the Industrialized parts of Asia like Japan, Taiwan, Singapore or Hong Kong. Yes, the 'rest of the world' so to speak, all of Africa, all of Latin America, almost all of the Middle East and most of Asia that is in that Emerging World, ie China, India, Indonesia, Philippines, Pakistan etc.
 
The 'West' where most of our readers live, consists of 1.2 billion people. the Emering World has 5.6 billion people. So I recently did a bit of analysis about the main technologies and split it along the digital divide. Yes, there are 1.5 billion TV sets on the planet, but they are not uniformly distributed. We in the Industrialized World have most of them, as we have most of the internet connections, broadband connections, personal computers, cars, credit cards etc. Only one device on the planet has more owners in that part of the world where 4/5 of the planet lives - and that is mobile of course.

PEOPLE, CARS, LANDLINE PHONES

So lets do a bit of a comparison. 6.8 billion people at the end of this year. 1.2 billion in the "Industrialized World" and 5.6 billion in the "Developing World". Lets see how they split up.. Oh, and for all those statistically minded - I will use throughout this blog the metric of 'per capita' penetration rate, not 'per household' and not 'per adult' but per every person alive. Bear in mind this includes child-age people who won't drive cars etc..

But yes, lets start with cars. I have been struggling to find a very current count of all automobiles in use, but am certain it is near 920 million in 2009. Where are they? We in the Industrialized World have 600 million of them, or there is a car for every 2 people or 50% per capita penetration rate. The Developing World? they only have 320 million cars, so there is one car for every 17 people. Only 6% cars per capita.

Lets take fixed landline phones. We in the Industrialized World have had total household penetration of fixed landlines for many decades now, and in many markets the total landline penetration rate is actually declining. But the total is about 725 million fixed landline phones for 1.2 billion people or a penetration rate of 60%. How does that compare with the Developing World? There 5.6 billion people have to make do with 425 million landline phones, for a penetration rate of 8%. That means in Latin America, Africa and emerging economies of Asia, there is on average one phone for every 13 persons. Wow, thats a lot of sharing, or going without..

COMPUTERS AND INTERNET

Well, we see ever more impressive numbers of internet users, now nearing the 1.7 billion user level. That seems a nice number, but it includes those who access on a PC at home or work, plus those who access at a shared PC like an internet cafe or a school, and those who access the 'mobile internet' on a phone. So lets take a breather here. To start with lets examine personal computers. Actually, not all of them even are connected to the internet...

So yes, there are now just about 1.1 billion personal computers in total in use around the world, counting all desktops, laptops, notebooks and netbooks. How do they divide?. We in the Industrialized World have most of them, 675 million PCs for 'us' meaning a penetration rate of 56% per capita, The density means there is a little less than 2 people per computer in use. How about the Developing World? Well, they have 425 million PCs in use. Those are spread very widely, with 12 people having to share, the penetration rate of PCs is only 8% in the Emerging World.

Now, what of internet access at home and work PCs? In the Western economies, essentially every PC has either dial-up or broadband access. It will not be 100%, but is close enough, that we can call it 675 million actually connected PCs to the internet, so the per-capita internet connectivity on home and work PCs is 56% in the Industrialized World. But in the Developing World not all PCs are yet connected to the internet. Only about three out of every four PCs is, so the total home and office connected PC internet penetration rate is only 6%, at 325 million connected PCs. Yes, one internet PC for every 17 people on average.

So then there is shared PC access to the web. The internet cafe style of access, for those who do not have a PC at home or at work. Again, this is a difficult number to pin down, so this is based on only sporadic data from around the world, but I am reasonably confident the scale is right. In the  Industrialized World, there are an additional 25 million people who do not have access to a PC at home or at work but still use the internet, via an internet cafe. Note most users in the internet cafe situations do have access at home or work, this is those who have not. This forms 2% of the population in the Industrialized Countries, and gives a total combined PC based internet access population, at home, at offices, and at shared internet cafe types of situations, of 58% per capita. 700 milllion internet users.

Compare that with the Developing World. Here the majority of PC based internet users do not have access to a PC at home or work, and use only an internet cafe. I measure that at 375 million people or 7% of the total population in the Emerging World who use internet cafe access. When we add the 325 M who use home and office PCs, we get total PC based internet users at 700 million, or 13% per capita. One internet connection for every 7 people and only half of them have reasonably easy daily access via their home or office PC. Makes you re-think the digital opportunity, doesn't it?

TV AND RADIO

So lets go to television. There are about 1.5 billion TV sets in use on the planet. In the Industrialized World we have nearly one TV set for every person alive, at 79% per capita, and 950 million TV sets in total. In some countries like the USA, there are more TV sets than people. So what of the Developing World? there are 550 million TV sets in the Developing World, so there the penetration rate is just shy of 10%. Not one TV per person, one TV per ten people. Where the average household size is 4.3 people, it means that outside of the Industrialized World, of the rest of the world, essentially half live in households that do not have even one TV set. Obviously nearly a billion people live in homes with no electricity, so we need to understand this in context..

So then radio? FM type of radio has a total worldwide installed base of 3.9 billion receivers (not counting the new mobile phones with in-built FM radio). We in the Industrialized World have tons of them, in our cars, our HiFi stereo sets, our boom boxes and our clock-radios. There are 2.7 billion FM radios in the Industrialized World, so we have on avereage 2.2 FM radios per person, a penetration rate of 225% per capita. In the Developing World there are 1.2 billion FM radios, so that penetration rate reaches an impressive 21%. Or of all technologies mentioned so far, the most widely spread, where there are a little under 5 people per FM radio. Still clearly this leaves hundreds of millions of homes without even a radio to entertain and inform the family.

MOBILE BREACHES DIGITAL DIVIDE

So then we have mobile. Here in the Industrialized World we have more mobile phone subscriptions than we have people. At 1.6 billion subscriptions, there are 1.3 mobile phone subscriptions for every person alive, in the Industrialized World today. In many cases, but not all, this means two phones, so for example an iPhone owner can also carry a Blackberry. But in other cases, typical of Eastern Europe for example, there are multiple subscriptions via inter-changeable SIM cards, using typically only one phone, and the user splits traffic across different networks to save money on calls, etc. Still, like with FM radios in the Industrialized World, we have more mobile phone subscriptions than people here.

What of the Developing World? Consider the math. There are 3 billion mobile phone subscriptions, for a per capita penetration rate of 53% ! Yes, even in the Developing World, mobile phones are now so common, that across the whole region, there are more than one phone subscription for every two people! This is an enormous number in and of itself.

COMPARE

But understand, in the Industrialized World, there are roughly similar 'scale' of the main technologies. More mobile phones than TVs, PCs or cars, yes, but not dramatically more. Roughly speaking twice as many phones as PCs or fixed landlines, only 50% more mobile phone accounts than TV sets, and actually less mobile phones than FM radios.

But in Africa, Latin America, the Middle East and the Developing parts of Asia, mobile is alone, far far bigger than any other. There are nine times more mobile phone accounts than cars. There are seven times more mobile phones than personal computers, nine times more mobile phone accounts than home or office PCs that are connected to the internet. There are seven times more mobile phone accounts than fixed landline telephone connections, and five times more mobile phone users than total number of TV sets in use. Even radio, there are 2.5 times more mobile phone subscribers than all FM radios in use in the Developing World.

By every measure, mobile is the giant, the only giant, and the other technologies are the lilliputs. If you intend to communicate with prospective customers in the Developing World today, then you cannot think of mobile as the 'fourth screen' and consider possibly including it in your communication mix, as we still can think in the Industrialized World, as a luxury today. No, in the Developing World mobile is the first screen - and obviously, for as many as 1.8 billion people - one quarter of the planet - it is the ONLY screen. These 1.8 billion people do not have a PC, not a TV, not even FM radio, but they have a live, active mobile phone account. Out of all 3 billion people in the Developing World who have some kind of connection, a massive 60% have no other way to connect, than their mobile phone! Did I get your attention now?

An internet connected PC will get you 325 million people or 6% of the population in the Emerging World. A fixed landline will ring in the homes of 425 million people or 8% in Africa, Latin America or Developing parts of Asia. A wealthy 10% of the population, 550 million people have a TV set and one in five, 1.2 billion people are lucky to own an FM radio. But more than half of the population have a mobile phone subscription, 56% per capita or 3 billion. And yes, 1.8 billion people - that is six times the size of the USA - have no other connection or technology, than a mobile phone.

SMS, MMS, BROWSING

While I have you. How do you communicate with them then? You don't buy ads on newspapers, and you don't put ads on TV or radio. You also can't send them emails or hope to reach them via some clever social networking marketing on Facebook or MySpace or YouTube or whatever is the current flavor of social networking. The way to reach the populations in the Developing World is four ways - voice calls on mobile, SMS text messaging, MMS picture messaging, and WAP basic banners and browser services on the very rudimentary 'mobile internet' services.

Lets put these also into context. Voice? In the Industrialized World about 88% of mobile phone users place voice calls (oh, you didn't know that? Already 12% have stopped voice calls and use their handsets for primarily texting or instant messaging, or some other mobile internet services). In the Developing World there is the trend to abandon voice calls and it is even more pronounced in some markets. like in India where 30% of mobile phone users do not originate calls, but this then hits issues of illiteracy, such as in Africa, where if you can't write, you really can't use SMS, and voice calls are the only viable way to communicate. Still, voice is a viable communication method in the Developing World for about 85% of the mobile phone user base. That is 2.5 billion people - twice the total population in the Industrialized World.

Second comes SMS text messaging, used by 76% of the mobile phone users on the planet. In the Industrialized World out of 1.6 billion mobile phone subsciptions you can communicate using SMS and reach an active user base of over 1.2 billion. Yes, in the Industrialized World there are more active mobile phone subscribers, who send SMS text messages, than all internet based email users globally. Yes, SMS is that big. And we haven't even touched the bigger part of SMS..  Because in the Developing World, you can reach 2.2 billion active users of SMS text messaging. SMS has four times the reach of TV, twice the reach of FM radio, and 8 times the reach of home/office internet connected PCs in the Developing World. This is where you start, unless literacy is an issue in that country. SMS is the most widely used data application on the planet with yes, nearing 3.5 billion active users at the end of this year. Remember President Obama and why he used SMS in his campaign...  This is the big one.

And then MMS. Yes, that 'quaint' picture messaging service that for some reason Apple didn't even include in its wonderful iPhone. Yet MMS is the second most widely used data application on the planet, having 50% more users than email or internet search...  In the Industrialized World MMS is one of many interactive multimedia options, and only 550 million people use the technology or 34% of mobile phone subscribers. This is by the way the fastest growing part of our industry, in many leading countries it is very high majoirty of all mobile phone subscribers already, in Norway 84% of all mobile phone users send MMS messages. CNN iReport receives hundreds of thousands of user-generated pictures and videos and Informa counted that across all mobile phone subscribers on the planet, we average 3.5 MMS sent per month - counting yes you and me who don't send that many.. That means the average level is nearing one per week sent across all subscribers, and is far more among active users, obviously.

Now, lets switch over to the Developing World, where for most people their only multimedia device is the mobile phone, often a second-hand Nokia basic cameraphone from a couple of years ago, discareded in the West and imported to Africa etc.. How is MMS? This is a big number, MMS alone has a billion active users in the Developing World, and is used by one in five people in the Emerging World. Yes, 19% penetration rate by total users. While in the West we can still afford to experiment with MMS in our ad campaigns, in India, China, Indonesia, etc it is totally a must. Like with SMS, there are twice as many users of MMS in the Developing World as there are in the Industrialized World. If I could urge you the reader to do one thing with your company this week, I would urge you to expedite your involvement with MMS. It has globally 1.6 billion active users, is a very powerful interactive multimedia technolgoy, that has a 'reach' in terms of devices and networks already pre-configured for it, of over 3 billion. You can reach almost half the planet if you create something cool on MMS. The Apple Apps Store cannot reach 1% of the planet, and all forms of the internet access will not reach half of what MMS can do for you. And yes, in the Developing World, MMS is the next big thing, happening right now. Not WiFi, not Bluetooth, not 3G... MMS.

And what of browsing, basic WAP type of basic 'mobile interent' use? That splits globally so, that we have 420 million active users of the mobile internet in the Industrialized World, or about 26% of all mobile phone subscribers. We have a strong infrastructure of broadband connected PCs in our homes and offices, so the rival mobile internet is one of our options, and needs to find its place, like with the Blackberry for example, or the iPhone. But in the Developing World there is no viable rival. Mobile browsing on basic WAP services have already 780 million users, more than all other types of internet access combined, home, office and internet cafe based PC access. Globally about 1.2 billion people use the basic 'mobile internet' browser services, but the vast majority of these are in the Developing World. How many people is that per capita? it is 14%, or one in seven people in the Developing World use Yahoo or Google or Amazon or Facebook or YouTube on a phone, and importantly - more than twice as many do so than have an internet connected PC at home or work, and also, nearly twice as many access internet services on their phone, than use any internet cafe to access browser content.

So there you have it. The digital divide. In the Industrialized World we have TVs, PCs, FM radios, fixed landlines and mobile phones to consider and compare and use and more than half of the population has one of each of those. In the Developing World, the only technology that reaches half the population is mobile telecoms, and all others are tiny in comparison. For the Emerging World, mobile is not only the first screen, for over 1.8 billion people  that is four Europes or six USAs in size, it is literally the only screen. 

For anyone who wants to quote these numbers, the source for all is TomiAhonen Consulting 2009, except where explicitly mentioned as sourced from somewhere else like the ITU etc. Anyone who would like to read my Thought Piece, a free 2 page pdf file on understanding mobile in the Developing World, please send me an email to tomi (at) tomiahonen (dot) com and I will send it to you by return email.

Billions billions billions, mobile keeps growing even in economic downturns

This is a wonderful industry to be involved in, mobile. Like I like to say, it is a magical money-making machine. And look at the numbers. We have several analysts reporting that the industry grew again in 2009, from Informa to Portio to Chetan Sharma etc. As regular readers know, my company TomiAhonen Consulting tracks industry stats and reports on them. It is now nearing the end of the year, and I am, ready to make some big picture projections to the industry final revenue numbers for this year. Last week I told about the break-downs of that 4.6 billion subscriber count. So lets look at how the money works in this biz..

900 BILLION THIS YEAR

Total industry service revenues will hit 900 billion dollars this year. This is the big growth number. Chetan Sharma Consulting told us that 2008 total revenues were worth 835 billion dollars, so to pass 900 billion, our idustry grew revenues this year by 8%. Not bad in a time of recession, eh? Obviously its significantly less growth than the 15% we had in total subscriber numbers this past year, but revenue growth is revenue growth, and in times of downturns, any revenue growth is very good news indeed. (and those who don't know, this industry is almost universally profitable, we sustain EBITDA margins between 35% and 45% globally, in almost every market. Very "poorly" performing markets like currently the over-heated UK mobile market still earn EBITDA margins of 20%-25%, and in most industries CFOs and financial controllers would give away all their spreadsheets for such strong profitability numbers).

MOBILE DATA 220 BILLION

But yes, I am now ready to call this year at 900 billion dollars in total revenues for mobile. And then what part is data? Ah, an interesting number indeed. We see mobile data growing at stronger rates than the overall industry and I project mobile data to hit about 220 billion dollars this year. As Informa adjusted their early 2009 projection of mobile data for 2008 down from 200 billion to 188 billion as they said this June, I trust this number to be very accurate as a "final" mobile data number for 2008. That reflected 23% growth from 2007 in the year when the economy then "cratered". Now I project 17% growth rate for mobile data for this year, and yes we will hit 220 billion dollars when the numbers finally come in. SMS text messaging will account for approx 120 billion dollars out of that. And yes, the non-basic SMS text messaging, mobile "premium data" industry will hit 100 billion dollars in value this year. WOW, that is a big number.

So, as it has been for more than a year already, mobile service revenues alone are bigger than all fixed landline telecoms related revenues combined, that of fixed landline voice calls, all data services and all landline, broadband, etc internet revenues. Mobile alone bigger than all of that. And this year 2009 is likely to be the year when mobile data (including SMS) will be bigger than all internet revenues including dial-up, broadband access, internet content and subscriptions, and internet advertising fees, put together.

So what is the biggest part of mobile data? SMS is the giant (biggest data application on the planet, over 3 billion active users, 2.5 times bigger than all PC based email by users globally), then next biggest - MMS.. yes, MMS. Did you pay attention, MMS, picture messaging, used by over 1.6 billlion people on the planet already, and delivering over 30 billion dollars of revenues - MMS alone is bigger than the global music industry.. And before you say "but I don't send MMS" maybe you don't, but Informa measured that across the planet we already average 3.5 MMS sent per mobile subscriber per month - almost one MMS sent per week - across all mobile subscribers, both active and inactive users of MMS. Almost half of Asians send MMS, and in Norway 84% of the population use MMS at least monthly according to this year's measurements by TNS Gallup. Yes, the second biggest mobile data service by revenues, after SMS, is MMS.

What of mobile content? Music continues to be the biggest mobile content category far in excess of 10 billion dollars annually. I am not yet ready to call the exact number for mobile music but it is clearly the biggest of the mobile content revenues. Mobile music includes ringing tones, true-tones, ringback tones, full-track MP3 downloads, various music subscription services, and a vast range of more exotic music services from Shazam to background music to music gifts to mood music. But yes, this is far beyond ten billion dollars in value, nearer 15 billion than 10 actually. Will update you when I am ready to give final count.

Voice is obviously the big revenue source for mobile telecoms. Note that voice minute costs are declining globally and there is an increasing proportion of mobile phone users who never originate voice calls at all (but use SMS text messaging). The proportion of mobile subscribers who never initiate voice calls was measured by Lightspeed to have been between 11% and 13% in the Industrialized World in 2008. Meanwhile in the Developing World, such as India, the proportion who do not originate voice calls is up to 30% of all mobile phone subscribers (while SMS is used by 90% of all mobile phone owners in India).

ARPU DECLINING

And yes, the industry is adding customers in very poor countries, who contribute anything from 5 dollars per month in China to 1 dollar per month in Bangladesh. This to an industry where the global "ARPU" Average Revenune Per User (and counted as "per active subscription" ie if you have two subscriptions on two networks, then you are two users, and your monthly spend is 2x ARPU for your country) very recently used to be 20 dollars. The ARPU is naturally a declining number, there is no "bad news" about this, on the contrary, when measured against SSS (Same Subscriber Sales) all markets show that existing customers will consume MORE revenues every single quarter, on the average across the whole active subscriber base. But yes, because the industry is spreading to every less wealthy parts of the planet, we are adding ever poorer subscribers who contribute far less per month, on average - but still add to the total revenues of the network. And yes, the overall ARPU is now down to 16.30 dollars per month. Out of that, 24% is data revenues, 76% is voice revenues, globally.

I want to make a point here. As over a third of all people who have a mobile subscription actually have two or more subscriptions, the real "average revenue per USER" rather than per active subscription, allowing for multiple ownership by a third of all subscribers; brings the global ARPU if measured by unique mobile phone owners/users, to 22.05 dollars. And this number has been remarkably consistent over time for this decade. As the overall ARPU per subscription has declined, but as the planet has gone from one user = one phone = one subscription, to now one in three mobile phone users having more than one active account the average spent per user on mobile has remained very consistently a little above 20 dollars per month globally. A very healthy industry indeed..

WHAT OF 3G

I have the ballpark figures for 3G, we are at about 325 billion dollars of annual revenues this year for 3G. So for the almost exactly 600 million active subscribers to 3G services (most in the Industrialized World, nearly half of Western European mobile phone users now have a 3G account), their average revenue per 3G subscription is 45.13 US dollars per month. I wrote recently at this blog, that 3G has more than proven itself and is a very lucrative industry, inspite of all that doom and gloom we had earlier in this decade about the "excessive" 3G license fees in some auctions etc. But yes, in very rough terms, about a third of all subsciptions in the Industrialized World are now 3G subscriptions, and they deliver roughly speaking a bit over a third of the world's mobile telecoms revenues.

WHAT OF THE DEVELOPING WORLD?

And a particular interest to me increasingly is the mobile industry now in the developing world. Nearly three out of four mobile phone users is in the Developing World. They deliver roughly speaking a third of the industry's total revenues. But I will do a bit of a "digital divide" blog separately soon to explain that part more, and compare and contrast the two.

But yes, the big numbers to remember - Mobile Telecoms Service Revenues (before handsets and network infrastructure sales) is now worth 900 billion dollars. Mobile alone is bigger than the fixed landline industry and the total internet industry combined.

Mobile data is worth 220 billion dollars this year. SMS is the biggest part at 120 billion, with mobile VAS services another 100 billion. MMS is the second biggest mobile data revenue generator, and music still the biggest mobile content generator.

The global mobile ARPU is down to 16 dollars when measured against the active subscription count of 4.6 billlion mobile subsribers globally, but is at 22 dollars when measured against the unique user count of 3.4 billion unique mobile phone users at the end of the year 2009.

The mobile data portion of total mobile revenues keeps growing and is now at 24% of all mobile service revenues. The proportion of 3G continues growing and deliver 325 billion dollars, and also, the proportion of the Developing World delivering revenues to the total industry keeps growing, where today a third of all mobile telecoms service revenues are earned in Africa, Latin America, the Middle East, and the less-developed parts of Asia such as India, China and Indonesia. It is a good business to be in, one that grows even when the economy is experiencing its biggest downturn in a lifetime. If you do not have a mobile strategy - isn't it time to get one now? And for those who want to understand the mobile industry, remember that I have a free mobile industry "Thought Piece" which in just two fact-filled pages, summarizes the mobile telecoms industry size. You'll get it if you write to me at tomi (at) tomiahonen (dot) com.

Explaining 4.6 billion mobile phone subscriptions on the planet

The world has a population of 6.8 billion at the end of this year, 2009. We here at the Communities Dominate blog have examined the statistics of the major technology and media industries, with a particular focus on mobile obviously, as we were the first to say in public, that all social networking services will head to mobile, as we said back in 2005 in our book Communities Dominate Brands, when most did not know what social networking was, and when nobody talked about YouTube or Facebook or MySpace and Twitter did not even exist. At the time when we wrote the book the total global blogger environment was under half a million, while today just English-speaking blogs number over 100 million. It has been quite a ride, these past four years or so since our book and we appreciate all the readers at this blog.

But yes, in that time mobile has grown from being just another technology platform, the widest reaching digital platform, widest reaching technology and widest reaching media channel (as we say, mobile is the 7th of the mass media, when put into chronological order of all seven mass media channels starting with print).
 
NUMBERS IN CONTEXT

And a little while ago, the ITU gave their projection that we will reach 4.6 billion live mobile phone subscriptions for the planet, by the end of the year 2009. Wow, 4/6 billion subscriptions. For comparison, there are 480 million daily newspapers by circulation (or probably less, as newspapers seem to be disappearing left and right in these troubling economic times). There are 900 million cars that are registered for use. There are about 900 million paid cable/satellite TV subscriptions on the planet. There are about 1.1 billion PCs in use of any kind including the new netbooks. There are less than 1.2 billion fixed landline phones - this number is also declining. There are about 1.5 billion TV sets and 1.7 billion total internet users. Note that of the internet users, today more people access web content (browsing) from a mobile phone, than from a personal computer - as we can see, the total world PC population is 1.1 billion, and many of those in poorer parts of the world, like in Africa and Latin America - are not even connected to the internet. Obviously most who access the web on a phone also do so from a PC, and today far more total internet traffic is from PCs than from phones. But as we have reported here before, today more total browsing is from mobile phones than from personal computers. In many developing world countries it ranges from 4:1 more from mobile as in South Africa to 10:1 as in Bangladesh.

But lets continue with the comparative stats. Credit cards? The world has about 1.8 billion unique holders of credit cards and about 2.2 billion unique holders of banking accounts. And then the last truly big technology - FM radios, the world has about 3.9 billion FM radio sets in use, although most of these are the multiple radios we have in the Western World, where a single person may have 4 or 5 radios easily. Also note that all other fave tech stories and gadgets are tiny compared to these, so gaming platforms like Playstations and Wiis or MP3 players like iPods or GPS devices like TomTom do not reach anywhere near a billion users.

MOBILE IS THE GIANT

Against that backdrop, comes mobile. I try to not call it the 'mobile phone' anymore, and certainly not the 'cellphone' as 'mobile' is best descriptive of the device and technology, it is far more than a calling device, or a phone. The word phone is literally the wong term for over 11% of all mobile phone/cellphone users, who never originate any voice calls on their devices - but do send text messages. In India the proportion is already at 30% of all phone users who never originate voice calls - but do send text messages..

So yes, the ITU reports that mobile will hit 4.6 billion subscriptions at the end of this year. That is two thirds of the total population of the planet. Wow. Compared to any other technologies - mobile is 18% bigger than radio, twice the size of unique holders of bank accounts, 2.5x bigger than unique holders of credit cards; over 2.7x bigger than all internet users - which includes mobile phone based internet users. Of PC based internet users, mobile is 4.6x bigger. There are 3 times more mobile phone subscribers than all TV sets on the planet. There are almost 4x more mobile phone subscriptions than fixed landlines globally, and more than 4x more mobile phones than all personal computers in use on the planet. And for those subscriptions - five times more people pay for a mobile subscription than pay for a cable TV or satellite TV subscription; and globally, almost ten times more people pay for a mobile than pay for a daily newspaper. Kind of makes you think, eh?

MULTPLE SUBSCRIPTIONS, DUAL PHONES

But that is not really the full story. We here at Communities Dominate blog have been analyzing more deeply into those mobile phone subscriptions, what is the reality. Once, ten years ago, a mobile phone subscription was the same thing as a unique mobile phone in use; and a mobile phone subscription was equivalent to 'unique mobile phone user' ie 'mobile phone subscriber". Those who saw me speaking ten years ago remember me pointing out that this was starting to be not true. Today all analysts agree, there are more subscriptions than actual phones in use, and there are more subscriptions, than unique 'subscribers.' Why? because many users will get two or more subscriptions, often to save on their costs. The prevalence of 'prepaid' subscriptions helps expand this offering where a subscriber does not need to sign up for a 2 year contract to get another phone number and account, on a rival network.

The phenomenon of the multiple subscription first tended to mean two subscriptions per person was also two phones per person, but that also was not true and we have reported on that split. Some who have two subscriptions are well to do, and have for example an iPhone and a Blackberry - one person, two phones, and two subscriptions. This is the common pattern with employed people in the Developed World. But we have now actually the larger proportion of the second subscriptions, of users with one phone, who use two or even more subscriptions on that one phone, switching the SIM card. So these tend to be almost exclusively GSM phones - and part of the appeal of GSM to the Developing World. People too poor to afford a 50 dollar basic phone, can still get a used GSM phone imported from Europe or the Middle East, to Africa for example, and then to further optimize on their costs, they get a couple of SIM cards and switch between them to get the best rates on a given call or message type, depending on time of day, on what network the other caller is, etc.

I was literally the first person to report on these phenomena, as they were first observed globally, in Finland in the last decade. My consultancy TomiAhonen Consulting has been providing the big picture numbers here via this blog, and in my writing and speaking engagements quite regularly, and as I said at the start of this blog, at the start of this year, January 1, 2009, we had 4.0 billion total subscribers, using 3.4 billion unique phones, which was 3.0 unique mobile phone users (paying subscribers) with the remaining 1 billion mobile subscriptions being second or third subscriptions. And yes, about 1 in 8 mobile phone unique users on the planet last year, used two phones. This is as much as one in two out of Western European phone owners.

SPLITTING THE 4.6 B NUMBER

So my consultancy has been monitoring that number, and we are ready to give the tentative preliminary split for the end of 2009. We find that of the 4.6 Billion total mobile phone subscriptions, that means 3.3 Billion unique subscribers of mobile phones. Thus a staggering 1.3 billion of all mobile phone subscriptions on the planet are now second or multiple subscriptions. So more than a third of the planet - 39% of the unique mobile phone users, who have at least one phone and at least one subscription - now have 2 or more. Wow. But we have been reporting on many countries with 'astronomically' larger mobile phone subscriber counts than total human population (not households, and not adult populations) ie Hong Kong at 140%, Ukraine, Italy and Taiwan at 130%, Russia, UK, Sweden etc at 120%, even many Developing World countries have passed 100% per-capita human count of mobile subscriptions, meaning they have more mobile accounts than people such as Malaysia, South Africa, Chile. Colombia etc.

But yes, I am now reporting that the total unique mobile phone subscriber count grew from 3.0 Billion last year to 3.3 Billion this year, and is just short of 50% of the planet's total population.

What of actual phones in use? Many who have 2 subscriptions have also 2 phones, and for example many who recently got iPhones or Blackberries, tend to have a second phone for other needs or on other networks. And then there are many who carry two phones from the same maker, for convenience reasons, so for example if they want a QWERTY keyboard, they have a Nokia E series, and then to get a great camera, they also have a Nokia N-Series, but then are able to standardize on the chargers, the car kits, etc. But nonetheless, we clearly have far more handsets in use than the 3.3 billion unique mobile phone subscribers, and we sold over 1.1 billion new phones this year 2009. I am ready to report that for the end of the year, we will hit 3.8 Billion actual mobile phones (or strictly speaking, "mobile devices" - as this also now increasingly includes 3G data cards and dongles to allow laptops to connect to 3G networks) in use. Also note, that there were clearly then 100 million new subscibers who shifted from carrying one phone, to carrying two phones.

So mobile phone (end user mobile device) active population on the planet grew from 3.4 billion to 3.8 billion this year. Also that obviously means that out of the 1.1 billion new phones sold this year, 700 million were replacement phones to existing users, upgrading their handsets, and only 400 million were new phones put into use. Still, 3.8 billion actual phones is yes, 3.5 times more phones than personal computers, and over 2 times more phones than TV sets, and almost as many phones in use, as stand-alone FM radios on the planet. Very big numbers indeed.

NEW NUMBERS

But we are also observing two new trends emerging in the world. There are families so poor that they cannot afford to get a phone or even a prepaid SIM card subscription for each family member, but find such utility out of the first phone in the family, that they do get one mobile phone account as a 'family phone' - much like for most of the previous 50 years in the Industrialized World, we had fixed landlines, as a shared family phone, one phone for the whole family. I have seen the phenomena reported in many Developing World countries, in very much a rural-area focus, so it seems that in cities even the poor often get their own SIM cards, but in rural areas, often the first phone for a family becomes a shared instrument. My consultancy has now done its first estimate of this portion of the total mobile phone subscriber base on the planet, and finds that about 150 million mostly poor people, mostly rural, in mostly the Developing World, have a phone that is shared by the family. Out of all unique mobile phone owners on the planet, that is 4.5%. But because the families tend to be large in India and Africa, where we see this phenomenon most pronouncedly, it means that the total 'reach' of unique people who have access to a mobile phone, either their own or a shared phone is now 3.9 Billion. Or 600 million people have access to a 'family phone' as a mobile phone, while not owning that subscription. in total 750 million people use such a shared phone which is 19% of all who can be reached by mobile phone on the planet.

So, 3.9 Billion unique people can be reached by mobile phone, that is 57% of the planet. Out of those 3.9 million people, 3.3 billion or 85% have their 'own' mobile phone, and 15% have a family-shared mobile phone.


And we have another new phenomenon. This too has been expected for this whole decade, but the numbers have been so small that they did not dramatically factor in the overall giant numbers of mobile. I am talking of non-human subscriptions, the various telematics subscriptions on the planet. This includes the electricity or water meters that are read by automated GSM chips, or the remote control chips to remote TVs like they sell in Singapore on the 3G networks, and the remote control modules for your household robots as they sell in South Korea. We are now having industrial massive use of GSM in such industries as forest management or livestock management, and even household pets connected via GSM collars, and we reported on the first household plants that now send in SMS alerts when they need water, as launched in Japan. We are starting to see telematics-connected GSM accounts reported by some of the more advanced indsutrialized country markets, such as Telestyrelsen, the Regulator from Sweden. And based on the early data on telematics, we at TomiAhonen Consulting can report that around the world, 200 million mobile network subscriptions are non-humans, ie telematics subscriptions. That is 4.3% of all subscriptions today and growing.

IN SUM

So to understand the whole 4.6 B mobile subscription number reported by the ITU. yes, there are 4.6 billion mobile subscriptions on the planet at the end of 2009. That means a growth rate of 15% in this time of economic distress. Very impressive growth.

That breaks down to 4.4 billion human subscriptions and 200 million machine/non-human animal subscriptions.

The human 4.4 billion human subscription number represents 3.3 billion unique paying human subscriber. Out of those, 150 million have shared family accounts, so the total mobile phone user base reaches 3.9 billion people.

Out of the 3.3 billion actual mobile phone paying unique human users, one third have two or more subscriptions, so there are 1.1 billion 'second or third' subscriptions actively in use. And of those 3.3 billion unique mobile phone users, 15% have second phones, so the total number of actual mobile phones in use is 3.8 billion mobile phones, and 1 in 8 mobile phones actively used on the planet, is actually a second phone by the same user.

There you go. These are the preliminary numbers for the end-of-year 2009, based on analysis by TomiAhonen Consulting, and this is currently the only place where you can use as a reference for these numbers. But please feel free to report on these if you blog or write or speak on mobile industry numbers. And obviously the current start-of-year 2009 numbers for mobile in great detail are reported in the Tomi Ahonen Almanac 2009, for which you can see many statistics and free sample pages at the Almanac ordering page.

Actually 'nobody' moved Nokia's cheese, it still dominates smartphones, slight shfits only in Q3

Well well, these are intersting times indeed.

I remember the hype was all over the blogosphere when Nokia announced its self-reproted market share im smartphones to be down to 35%, and many pundits were all over the space predicting the end of Nokia. We here at CDB reported the numbers, and wondered, who actually had 'stolen' Nokia's strong market share, in who moved my cheese and its follow up blog, we know half of who moved the cheese.

But it was far too much of a total shift in market shares in one period, to be able to be explained just by Apple and RIM, after the full results of all makers came in like Samsung, SonyEricsson, Motorola, LG, HTC, Fujitsu etc. Now we have the 'final' numbers, the 'official' numbers for Q3, 2009. The two major analyst houses who are regularly referenced as the most credible sources, IDC and Canalys have both reported their final count of the third quarter of 2009 for Smartphones. They find a bit of a difference by one or two percentage points, as might be expected, but have no argument of the order and magnitude of the big four, but if we average the two, we get these market shares for smartphones Q3 in 2009:

Nokia 39%
RIM 20%
Apple 17%
HTC 5%
Fujitsu 3%
Samsung 3%
All others 13%

Most of the story is more-or-less the same as in the "who moved my cheese" blog postings, plus or minus one percentage point, but the Nokia share is dramatically different today. Note this is reality, not the early reporting. The reality is that Nokia still holds 39% market share of all smartphones, is still bigger than the next 2 put together (RIM and Apple) and only lost 2% market share from Q2, and actually grew 1% market share from the same quarter the year before. Most importantly, the way I look at it, the relevant metric - Nokia is doing BETTER in smartphones than their handset market share globally, meaning 'all is well' in terms of their strategy.

Yes, Apple is growing very strongly from the last quarter (although, according to Canalys measurements, this quarter in 2008 vs this quarter in 2009, Apple actually lost market share compared to this time a year ago) and RIM is either holding steady or growing (IDC has them holding, Canalys growing). RIM is always a difficult smartphone brand to factor in, because they report one month later in their quarter, so their 3rd quarter is not like the others from July to September, the RIM quarter runs from August to October, and we get RIM numbers always a month later than the others. So the analysts have to make a guess about RIM.,,.

But yes, we heard a lot of hype about Nokia doing a death-dance in smartphones, like Motorola doing its death dance in mobile phones. Rubbish, Nokia is doing just fine. It did lose 2% of market share, yes, and Apple actually gained more than 2%, so Apple is winning currently and Nokia has lost some market share, but no time to panic. Nokia is still the giant, and most importantly, their smartphone market share is better than their global handset market share, so here is a global handset giant, clearly set on building its future as well in the smartphone space. None of the other big 5 handset makers, Samsung, LG, SonyEricsson or Motorola, have smartphone market shares anywhere near their global handset market shares. If you think smartphones are the future of handsets, then Nokia is executing 'perfectly' in that space. But who of the tech journalists is now going to write this story? The more 'fun' sexy and glamorous story is to write about Android or Apple being the hot smartphone. Incidentially, Android has about 3.5% of all smartphones, split across dozens of models and many makers, so in size, they are about as relevant to smartphones as Fujitsu or Samsung, far smaller than HTC. How often did you think HTC, Fujitsu or Samsung are the leaders in smartphones?

And one comment on RIM. I may still have to come back to this statistic and correct it one more time. RIM hgas said recently in October that they expect their total shipments at 9.9 million smartphones for this quarter. If that is true, and the Canalys and IDC numbers had them in the 8 million plus range, then expect RIM market share reality to be boosted by about 2 percentage points more, so the 'real' RIM market share may be as big as 22%, would be a dramatic growth rate indeed. But we wait until RIM reports officially. Certainly both Canalys and IDC indicated in their smartphone press releases that RIM is growing strongly compared to this time a year ago. The question only remains, exactly how strong had their growth been..

Ok. to the mystery of who moved my cheese, nobody really. That 2% shift in market share from one quarter to the next for Nokia is well within their normal fluctuation. As long as their smartphones outperform the overall company, they are doing just about as well as we could expect. Why the discrepancy by the way? beacuse when Nokia reported their Q3 numbers, thay only had their internal numbers to compare to, and they had over-estimated the total market size, and thought they had lost more than they had. In reality, the global market for smartphones had grown less than Nokia thought, and thus their market share in reality was better than they thought. This can easily happen in these kinds of volatile times, when the global economy experiences big shifts.

A few big numbers now confirmed - 1.2 B mobile web users, 100 B dollars SMS and 3 B SMS users

At this blog we give the state of the mobile industry in statistics, at the start of each year, and also give short-term predictions of where the mobile industry is headed. Then we wait for the 'big industry analysts' to come out and verify those numbers.

We have several numbers now to report. Lets start with my absolute fave service, SMS text messaging. I told you in January that SMS had 3 billion active users, and that was 76% of all mobile phone users. We have now heard from Portio Research, who do report that SMS total global user base has passed 3 billion users. Portion also reports on the total revenues earned by SMS, and yes, that number has now officially passed 100 billion dollars. Yes, as we told you here before, as of now, the service that is only 16 years old, has grown to such a giant, it is as big as the global music industry, plus the total worldwide movie industry, and the total worldwide videogaming industry - added together. That is 100 billlion dollars. Or to put it another way, its bigger than global radio, or bigger than worldwide book publishing,.. Not bad for a messaging platform that allows only 160 characters per message..

Then I found finally the first analyst to give an update for 2009 for mobile web/mobile internet/mobile browsing usage. Note that this is not "the real internet" on a phone, this is any kind of browsing use, both the "real internet" like say on an iPhone or email on a Blackberry; as well as the "mobile internet" ie WAP usage of what is often operator/carrier portals. Yet, if you accss Google on a phone, regardless of whether via web in the traditional HTML and WWW basis, or via WAP, it is still a browser-based service. Same for Ebay or Yahoo or Twitter or Facebook. Any browser based access on a phone, that is "equivalent" to accessing that same internet service and its (usually mobile-optimimized) mobile site.

So Yankee Group reports that we now have 31% of all mobile phone owners using the mobile web, If you feel that it cannot be, that you don't see that many users around you in your world, remember these are global numbers, so they include of course all those countries where mobile web use is far greater than PC based internet use, such as South Africa or Japan or India etc. And yes, previously it was me and my consultancy saying so, now we have a major analyst house, Yankee Group, giving us the number.

31%? how many users is that worldwide? at the start of the year we had 4.1 billion mobile phone subscriptions on the planet, so at the start of 2009, we had reached the level of 1.27 billion mobile browsing users. Then if you are savvy with internet stats, you may say, but Tomi, the internet user numbers are bigger than that, Are they? Almost all measures of internet use include PC based access, and mobile phone based access, and access from rented computer access, in the form of internet cafe's etc.

We have the actual count of unique users of home and office based PCs at the start of the year 2009, and that comes from ComScore earlier this year, and that was 1 billion unique PC based users of the internet.

Now, Yankee says 1.27 billion who surf the mobile web globally, and ComScore who say 1.0 billion are unique PC users. Obviously there is overlap, and if the total number is 1.5 billion internet users, then about 700 million will use both methods, and 500 million will access exclusively on a mobile device, and 300 million access exclusively from a PC. In any case, in terms of users, the cross-over point has now truly happened. There are more people on the planet, who surf web pages (and WAP pages) on a mobile phone than on a PC,. And now toss in the iPhone and Blackberry and various iPhone clones and see how that trend will only accelerate in favor of the mobile. Like Google CEO says, like Yahoo CEO says, like Apple CEO says, like Microsoft CEO says, like just yesterday, ESPN CEO said, the internet is going mobile (fast).

And please understand, the usage is different. The PC, often on broadband connections and with unlimited data plans, will produce FAR more data traffic, and often far longer usage hours than mobile web surfing. But also here, the trend is ever more mobile. Twitter and Facebook find that often mobile users have similar usage patterns to PC users, and then mobile seems to grow bigger... Like it did in Japan already a few years ago - Japan was the first Industrialized World country where mobile internet use became bigger than PC based internet usage.

Now, Yankee did not explicitly give that conclusion, that 31% of all global mobile phone users of the mobile web is bigger than the PC based users of the internet, so we have only the 'raw data' so far, but this is the first big research house to say so. Trust me on my numbers (numbers are my buddies), I am solid on this, the facts are coming and don't be surprised. The world already has more "browsing" users who access on a mobile phone, than on any kind of PC worldwide, and from now on, the gap will increase between the two. The legacy PC based "6th mass media" internet, is truly the "little" old internet, and the "mobile internet" is the new bigger and more wealthy internet. The change has happened...(And you should prepare to make business out of this transition, this is a big economic opportunity, this transition). And one more thing, as I keep repeating in my books and lectures - the legacy PC based internet is not going to die, just like TV did not kill cinema and radio did not kill recordings. The old legacy PC based internet will adjust and find its opportunities, even as mobile grows to be the true media giant it is headed to become, Remember SMS, already today, mobile has 3 times more data communiation users than any unique users on the PC based internet... 

And for those who would want to understand the full picture of mobile, the difference between subscribers and second subscriptions and unique phones in use, and SMS and MMS, and mobile web, entertainment, news, advertising, etc, you can always pick up a copy of my TomiAhonen Almanac 2009, a very widely referenced industry statistical resource which has of cousre all of these numbers and hundeds more in 70 tables and charts. See sample pages and many stats and charts at Tomi Ahonen Almanac 2009.