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« What Do We Now Know after Nokia Shareholder Meeting? - That the Future is Far Worse than we Thought (updated 2X) | Main | Nokia So Alarmed: Release Full Text and Video of Skype Comment by Elop, trying to spin the story »

May 06, 2012

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cycnus

Wow... APAC developing percentage is really high in QR and also in social networking.

Tomifan

@Tomi
Could you sync the regional split of mobile wallet in Asia to your claimed Nokia Money users in India? Sounds to me that about every single mobile wallet in India is Nokia Money if both numbers are legit.

Francisco Moreno

I was hoping you'd speak a bit more about the decline of BBM, and the ascent of WhatsApp, Viber, Skype, and iMessage as texting platforms.

With regard to genuine, normal human beings scanning and using QR codes, I think the definitive blog is:

http://picturesofpeoplescanningqrcodes.tumblr.com/

Baron95

Tomi, SMS *revenues* have peaked overall and have started to decline in Asia and Europe.

The Ovum Feb/2012 report records that in 2011 $13.9B in SMS revenues has been lost to IP. With the trend accelerating.

iMessage (not BBM) is the biggest driver of the decline now. In the first 3 months since iPhone 4S/iMessage launch, 100 million iMessage accounts were activated and 26 billion iMessages were sent (again read the Ovum report).

A few other datapoints for you to get the magnitude of the decline. Swisscom just reported that their SMS revenues fell by 28% this quarter driven ENTIRELY by displacement to IP (again, mostly iMessage).

Tomi, you do a great job (probably the best) reporting on past numbers. But like with Nokia/Symbian vs iPhone, I think you are severely underestimating how fast the shift from the insanely priced SMS revenues are escaping to near free IP traffic.

This is similar to the fact that mobile browsing only started in earnest once Apple launched the first fully functional browser on a phone.

Unlike the klugy BBM that requires creation and registration of BBM IDs, iMessage is automatic and transparent to end users. If the recipient has an iOS device the message will be rerouted to iMessage transparently.

Similarly, Facetime is completing the (never caught on) UMTS video calling and (together with Skype and the like) eating into calling minutes.

Further, this is teaching advanced users that all they need from operators is a fast, low latency, low cost dumb data pipe.

Perversely, it is also making rich Americans, Europeans, Asians, pay much, much, much less per message than poor people around the world on pre-paid SMS phones.

I.E. the carriers have predatory pricing for the poor, while the rich, well informed consumers escape the charges.

You, should be blowing the whistle on this

Baron95

Now some more datapoints that are important for future trend predictions - again, you need to look at the early signs. The future will not be a linear extrapolation of the past.

In the US market, which, despite what you may think, is shaping the present and future of smartphones and mobile computing, the trends are setting up for a huge inflexion point.

The latest NPD data, shows that, in the US, 2/3 of phones sold are smartphones, and of those, a full 90% - that is NINETY PERCENT - are either Android or iOS.

I think the trend is clear - in the very near term, there will be two (at most three) OS/ecosystems controlling near all the handsets.

What does that mean? Well, if Google manages to roll out an iMessage equivalent, and if the two interoprate, then all of a sudden you can see a near collapse of excess SMS revenues.

Now, add to the mix, that these phones over the next two years, given the replacement cycle, will all move to high-speed, low latency LTE, and will be there most of the time.

Well, suddenly Facetime and Skype calls over IP will have near full reach, will be in fact higher quality than cellular calls and will be basically free.

Tomi, that is the disruption that I'd like to see you cover. No, operators can't fight it. Apple is unstopable - carriers that don't have the iPhone lose high value subscribers. Apple will continue to add convenience and operator toll bypass features into iOS. Google will use that as an excuse to add the same features to Android.

This is just the very beginning of control moving away from operators and operator-aligned OEMs (RIM, Nokia, DoCoMo OEMs).

cke

@Baron95 - and there comes the decline of the operator "orifices" that Jobs railed on about.

So Vatar

@Baron,
these are comments coming from your side that I like much more, more content instead of arrogance.

I largely agree with your comments, but there is one issue that won't go away that easily, at least here in the USA with the monopolized carriers:
In order to do the IP based things you describe you do need a data connection. And the spectrum is owned by the carriers. So, logically they will shift their revenue (and profits) from "legacy cell phone functions" to IP based revenues using their spectrum. There is technology available to determine (via package inspection) which services are used over their networks (IP call, IP messaging, browsing, etc). The revenue shift is already under way, as unlimited data plans went away, carriers disallow certain services (tethering) etc. So, our great monopolized carriers will not go away without a fight as long as wireless spectrum is rare and in their hands.

Of course consumers hqve a way around it: Forgo the wireless 24 month contract data plan and use the smartphone data connections primarily on WiFi. Further proliferation of WiFi hotspots - which already are available at home, at many work places, some public transport systems, and many businesses (Starbucks, coffee shops, hotels etc) in addition to an optional supplemental on demand carrier data connection (usage based) are a possibility for consumers to get many of the benefits of an expensive data plan for a fraction of the cost.
Now, if one has to be connected all the time in order to check facebook and check in with foursquare, then you need AT&T et.al, they will take care that your wallet doesn't get too heavy.

Additionally I see an opening forming to disrupt the legacy carriers. We'll see how this will turn out and who the disruptor will be.

Baron95

@So Vatar - not exactly. With pure cellular call, *ONLY* the mobile operator can initiate or complete the call - customer is captive. Same with cellular SS7 SMS - captive.

With IP, the user is no longer captive. If the operator charges too much for data pipe, user just shifts more and more of their usage to WiFi - either free-public or paid-public or home or work.

With LTE and all services via IP, the user is empowered to do data rate arbitrage. If I am home, at work, at a library, at a starbucks with WiFi, I use that. Or I pai $10/month for a service like Boingo, and sign up to the minimum carrier data plan.

Plus the IP services have many, many advantages for the user. For example, I can use iMessage and FaceTime and Skype when I am on a plane at 30,000 ft using the on-board wi-fi service. Cellular SMS and cellular calls and cellular data are useless in that environment.

Make no mistake. 5-10 years from now, operators will not be able to extort advanced users in advanced markets to the extent they do today.

This is equivalent to what happened to the railroads in the US once trucks and interstate highways developed. Suddenly what railroads could charge for freight, was limited to the lowest long distance truck freight charges.

They went from a monopolistic position, to an also ran and lost 90% of the US freight business in a couple of decades.

AT&T already went to a flat all you can eat domestic SMS plan because of iMessage. Not my opinion, De LaVega said that last week.

So Vatar

@Baron:
Isn't that what I said? No?

Baron95

Sorry So Vatar - I replied from my phone and had only seen the first part of your post. Yes. Agreed.

I don't think Tomi understand what is happening with SMS in the iMessage (et al) era. It is shocking that in 3 months, Apple moved 10% of the SMS traffic to iMessage.

elina

I have to say,I dont know if its the clashing colours or the bad grammar, but this blog is hideous! I mean, I dont want to sound like a know-it-all or anything, but could you have possibly put a little bit more effort into this subject. Its really interesting, but you dont represent it well at all, man.

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CIO

Nokia is bankrupt; here's why:
- Pending massive costs associated with future layoffs at Nokia (my very optimistic estimate is around 4 billion Euro?),
- Massive costs associated with NSN failure including pending layoffs (2 billion Euro?),
- Pension fund costs (1 billion Euro?)
- Pending tablet failure (1 billion Euro?)
Now just add up cash Nokia will burn each Q due to failed Windows Phone strategy (1B euro / Q?) with falling Symbian sales and bankruptcy is guaranteed. It is also unlikely that anyone will acquire Nokia. Google/Apple or Microsoft would only be interested in patents and certainly would not like to deal with closing Nokia factories, dealing with thousands of NSN employees (especially unions) and various other liabilities. This is the same reason why they couldn't sell NSN despite being desperate. Sorry to say, but Nokia is already gone. It's sad to watch. Tomi's strategy to save Nokia could probably help to recover this company up to last month, but now it is too late and everything will pretty much end on July 19, unless they'll take WorldCom path.

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