Trillion with a T, the Newest Giant Industry has Arrived: the Money and Meaning of Mobile

Trillion with a T. That is 1,000 Billion. Or one million-million. To write it out, that is 1,000,000,000,000. One followed by twelve zeros. Its a big big number. And when you add the dollar sign, that one Trillion dollars - that is a monster of a number. And we now celebrate the newest Trillion dollar industry for the planet - mobile.

KNOWING ME, KNOWING YOU

This is really a big thing. Lets do a quick comparison. Big global industries? I write books, so I am part of the book publishing business, as a little contributor to it. That books business, is part of a bigger industry sector, called print, which also includes newspapers, magazines etc. A very big industry indeed. Employing millions on the planet. But is it a Trillion dollar industry? No. Only about half that. How about television? Television broadcasts in every country. Its a media giant. Actually, combined with radio, the broadcasting industry is still nowhere near a Trillion, only about half that. How about advertising? Surely that is a giant global industry. Yes, its big, but also advertising is worth roughly half a Trillion dollars, in very round terms. Well then the IT industry? No, another half Trillion there.

Lets move beyond of the tech and media industries - lets think big. How about bottled water? Drinks, milk, beverages. Lets make this big. Pepsi, Coca Cola, Red Bull. Tropicana orange juice. Heineken, Budweiser, all the wines from France to Australia. Hard liquor, the vodka martini, shaken not stirred. A good Speyside single malt whisky like a Glenlivet or Cragganmore or Tomintoul. Coffee. Tea. The worldwide beverages industry.. Ok, its big. Yet, its not worth a Trillion dollars in size.

Air travel. Surely that is a giant industry, all those Jumbo Jets and air travel. The Airbusses including that big 380. Nope. Not a Trillion. Air travel is also in the half Trillion dollar range.

Cars. Now we're talking. Yes, the total worldwide automobile industry is worth about over a Trillion dollars in annual sales. Adding all of Toyota and GM and Ford and Nissan and Volkswagen and Mazda and Hyundai and Fiat and Renault (and Aston Martin and Ferrari and so forth).. All cars sold globally every year. Now we have a Trillion dollar industry.

The world total GDP - the total Gross Domestic Product for the planet - is about 55 Trillion dollars. Our economy does not have room for more than a handful of Trillion dollar industries. Look at the countries. Russia, Spain, Canada, Brazil, India, Switzerland - most big countries on the planet - their total national output per year - do not hit one Trillion dollars. Italy, France, Britai4n are countries whose total domestic output exceeds a Trillion dollars. That is the size we're looking at. All of Japan is 4.5 Trillion dollars. All of the USA is 14 Trillion dollars.

So yes, cars. A Trillion dollars. Or say, the global food industry, yes thats a Trillion there, food. And armaments business (the global weapons industry, isn't this world a crazy place, that we spend a Trillion dollars every year in weapons?). There are honestly only a handful of industries that are Trillion dollar businesses. We have a new one. For the first time in 2008, mobile telecoms became a Trillion Dollar Baby

THE NAME OF THE GAME

Wow. Where did that come from? Ten years ago, wherever you went on the planet, even in the most advanced markets, the mobile phone was only an executive toy. In most advanced industrialized countries like Germany, UK and the USA, mobile phones were toys for the boys, status symbols, expensive accessories for the young and up-coming business types. People who pretended to be important..

In 1998 there was only one exception to that rule, and that was Finland, where for the first time only that year 1998, the mobile phone penetration reached and passed half of the total population. The rest of the world looked at those gadgets with a lot of suspicion and declared, I do not want one, and I think anyone who feels a need to be babbling on the phone all day, is pretty messed up in their head.. Yeah. That was only ten years ago.

In 1998 the mobile phone industry sold 163 million handsets. In 1998 there were 309 million mobile phone subscribers globally. These were impressive numbers for a "high tech" industry (today Apple's iPod or Sony's Playstation would love to have such annual sales and installed base numbers). But yes, in no country other than Finland, was there even one phone subscription for every two people. Today there are over 60 countries where mobile phone subscriptions exceed the total human population..

Its grown real fast. So lets examine our Trillion Dollar Baby a little bit. First, what is that money? This blog posting will give the big picture view to your newest Trillion dollar industry.

RING RING

The pie can be divided roughly into two slices. The big slice is that of mobile services (the cost of our call minutes, text messages and premium content we consume). And the small slice is the hardware, mostly the mobile phone handsets and the network infrastructure. The services part covers roughly speaking 80% of the Trillion dollars per year, and the hardware is roughly speaking 20% of the industry - a little over 150 billion in the handsets, a somewhat under 50 billlion in the network equipment.

So what of the mobile services. Is that all the stuff we buy for our shiny new iPhone or is it all of that emailing on the Blackberry? Actually just under three out of every four dollars spent on mobile services is basic voice calls. Worth roughly speaking about 600 billion dollars this year. Another approx 130 billion dollars is our mobile messaging. And the rest is mobile "premium data" ie non-messaging data for mobile phones (worth about 70 billion dollars).

I do need to take a pause here. First, that 600 billion in mobile phone voice revenues. Note that it is more than the total fixed landline telecoms business worldwide. The fixed landline business is in a death-spiral. Nobody cares for a home phone anymore. If its an international call (where the big telecoms money used to be), that is all vanishing due to Skype. And the rest of landline calls? Going mobile. In Finland - where this sillyness all began, Finland was the country that launched modern (digital) mobile phone service in 1991. But yes, in Finland, today over half of all homes have abandoned the fixed landline altogether. The EU average is past one in four homes that has abandoned the landline. In America its already past the ten percent level. Nobody uses the landline for voice calls, the homes that still have a landline, use it for their internet connection. We prefer to be untethered. And the country that has been unplugged the longest, is Finland. So many of the trends we'll find in mobile, we can spot first out of Finland.

Oh that reminds me. Did you walk by a telephone booth today? That iconic phone booth which is visible in all city scenes in all countries. Well, all countries but one. Finland has already approved the de-commissioning of all payphones. There is no market for them anymore, when every citizen has a mobile phone. Look closely at the phone booth in your home town the next time you pass one. In a few years, it won't be there anymore. You might want to take a picture and tell your grandchildren about how phones were once tied into these tiny one-person standing-sized houses that we built for them. Your grandkids will find ths story most amusing of how bizarre the old world used to be.

ONE OF US

So then lets move from the money to the people. How many have one? Ten years ago, there was a mobile phone subscription for 5 percent of the planet. Today there are 3.95 billion mobile phone subscriptions (lets call it an even 4 billion, we'll be at 4 billion in January). Even at 3.95 billion today, that means there is a mobile phone subscription for 59% of the population on the planet.

How can we put that number in context? Lets give comparative numbers. There are 800 million cable/satellite TV subscriptions. There are 850 million cars. There are 950 million personal computers (laptops and desktops combined). About 1.2 billion fixed landline phones. About 1.2 people use email. 1.3 billion is the total number of internet users. All television sets on the planet number 1.4 billion and credit cards, there are about 1.5 billion unique holders of a credit card (most are in the Western world and are employed adults, and of the people who do carry a credit card, if you have one, chances are you have several credit cards).

Understand the scale. The other major technologies and subscriptions we have, run in the 800 million to 1.5 billion scale. But mobile phone subscriptions will be at 4 billion just after the New Year.

Its not 4 billion phones, and its not 4 billion unique mobile phone owners. Nearly one in three phone owners has two or more mobile subscriptions (think of an iPhone owner who also has a Blackberry). So my consulting company, TomiAhonen Consulting has been tracking this multiple subscription development - I was the first expert to discuss this phenomenon at an international conference in 1999 - and our latest numbers reveal that the total number of unique mobile phone owners is now 3.05 billion (46% of the planet's population do have a mobile phone, even after we remove the multiple subscriptions).

And some of those with multiple subscriptions have two phones, but others have two or more subscriptions to save money and can only afford one phone (or don't want to carry two phones, Samsung already offers phones that have two SIM card slots, to allow one phone to connect to two separate rival mobile phone networks, at the choice of the individual consumer). Again my consultancy monitors this development and now reports, that there are 3.4 billion mobile phones in use by the 3 billion unique users.

So, globally, nearly half of the planet has a mobile phone and subscription, and out of those, one in eight will carry two phones. 3.4 billion actively connected mobile phone handsets in use, today. Nearly three times as many as fixed landlines. More than twice the number of television sets. And these 3.4 billion mobile phones are in active use and carried by us everywhere we go. As we have discussed here at this blog, nine out of ten carry the phone with them every moment of the day, keeping it within arm's distance 24 hours a day - yes, taking it to the bathroom and yes, taking the phone to bed (or bedside table).

Not only is this a huge industry, it is a dynamic one. It is very difficult to get to terms with the sheer speed of this business. So remember, the total installed base of personal computers, amassed over the past three decades is now at 950 million in use in the world. Now, hold that thought. They sold over 1.2 billion new mobile phones just this year. Oops. Yeah !  (Note that the total sales of new personal computers, laptops and desktops this year, is about 270 miliion.) But over 1.2 billion new phones sold this year.

SUPER TROOPER

Then consider that new smartphone in your pocket that you got this year. A new SonyEricsson or Samsung or LG or Nokia N-Series or E-Series or maybe an iPhone or Blackberry? The processor in that phone is as powerful as a laptop of only one generation ago. The full computing capacity (CPU processing power and speed, in-built memory, data storage, etc) of today's top end smartphones is equivalent to the computing power of a laptop five years ago, a top end desktop ten years ago, a mainframe computer fifteen years ago, and a supercomputer twenty years ago.

So the space shuttle was designed on computers that were far less capable than the phone you have in your pocket. And many of us have two such supercomputers in our pockets, that can be "networked" on a private connection via bluetooth in a moment's notice, by us. No networking propeller-head geeks required.

Imagine a bizarre time-warp. if the designers of the Space Shuttle in 1980 had somehow received a visit by one person from 2008, with two top end smartphones.. "I see you're doing some computer aided design. Isn't that NASA supercomputer a bit slow? Would you like to borrow one of my phones and do the calculation in minutes rather than days? Oh, your friend here? I have another such phone too, you can borrow that. In my time in 2008, its normal for people to walk around with two of these devices. Oh me? I don't use the computing ability, what we call the PDA functions, I use the camera on the phone, send some messages, make calls. Oh, I do use it sometimes to play some songs with it, but my kids love the videogaming ability.."

A supercomputer. I did the specs when I presented for the Canadian wireless industry 20th year anniversary event in 2005, and my then-current Nokia 6680, was specs-for-specs equivalent (in some cases superior) to the performance of the world's fastest supercomputer in exactly twenty years earlier, in 1985, the Cray XMP. Now three years later, that 6680 is a really old phone, forgotten and forlorn, and I've since then retired a further four fmore powerful phones since that one, and carry two high-end smartphones today.

The replacement cycle for mobile phones is now down to 15 months. We replace our personal computer every 3.5 years but we replace our phone after one year and 3 months. In the advanced markets like Japan, South Korea and Hong Kong, the national average replacement cycle is down to 12 months. For those who have two phones, the effective replacement cycle is then 6 months. We have synchronized the phone industry with the fashion industry. They actually do have two seasons of new phones in Japan's fashion catwalks, the Spring fashions come out in February, the Autumn phones come out in September.

THANK YOU FOR THE MUSIC

But this industry is amazing. Take music. Apple launched its iPod in 2001. There were no MP3-playing phones in the world until in 2003, when the first modern musicphones were introduced in South Korea. While Apple iPod sales more than doubled year-on-year and posted 12 straight quarters of continous growth up to the end of 2005, and all of the IT world marvelled at the phenomenal tech darling, very quietly the musicphone emerged and obliterated the iPod's short-lived reign as top dog. Apple iPod sales still grow year-on-year, but in 2006, the iPod saw for the first time ever, two straight quarters of diminishing sales. Oops, what happened? Perhaps the MP3 player market had reached saturation, that must be it.

No it wasn't. It was that the musicphones appeared in major Western markets. The total global market for MP3 players still more than doubled in 2006, and almost doubled again in 2007, but the shift was away from stand-alone MP3 players like the iPod, and into the newer musicphones. In the last great year for the iPod, 2005 while iPod had its last year of four quarters of growth, actually more musicphones were sold than iPods in the world. The next year, 2006, MP3-playing musicphones were outselling iPods by a ratio of 7 to 1. Not only was Nokia's line of musicphones outselling all of the iPod that year, so too was Samsung's musicphones, SonyEricsson's musicphones and Motorola's musicphones (Razr V3's) in 2006. Not every musicphone user has to use his phone for consumption of music, if the numerical advantage is that lopsided. Seven to one? Today iPod sales are flat (about 6% annual growth) while musicphone sales grew another 40%. No wonder Apple had to rush its iPhone to the market.

There is nothing unique about this market carnage with music players and the phone. The same story happened earlier with stand-alone PDAs. And right now? GPS? This year 2008, Nokia became the world's largest supplier of GPS devices. Its only an added feature on premium Nokia phones, and not every user even cares to use the positioning technology. Yet its there on the phone. But when the industry ships 1.2 billion new phones - yes, 3 million new phones ship every single day, Saturdays, Sundays and all holidays included - that gives it an enormous momentum and the ability to devour almost anything it wants. Oh, how about cameras you ask? Yes that too. The first mass market cameraphones were introduced in Japan in 2001, and Nokia has been the world's most common digital camera brand since 2004. Today the phone industry has shipped a cumulative 3 billion cameraphones, and the current installed base is 1.9 billion cameraphones. 57% of all mobile phones in use on the planet are cameraphones already. Oh, the stand-alone camera industry still lumbers along, selling now a little over 100 million stand-alone cameras but did you notice, since cameraphones appeared, two of the four camera giants have quit the camera business altogether. Minolta and Konica, no more in the camera biz. Shame. My first SLR was a Konica, they made great 35 mm film-based cameras - three decades ago..

UNDER ATTACK

So we get to major cross-over points. So you think the internet is a cool thing - you read our blog here, across the internet. Yes, we all use it. And yes, there are 1.3 billion people who access the internet. But there are only 950 million personal computers. So clearly there are other devices also connecting to the internet. Ha-ha, yes, the light bulb is going on. Yes, those clever little iPhones and smartphones and Blackberries and all other little pocket wonders. Yes, I think I can see it now. Must be 350 million who use a mobile phone to access the internet, right? 1.3 billion minus 950 million.

Not so fast, buster. How about the iPhone owner who also has a Macintosh computer? Uses both the iPhone and the Mac to access the web....  And the Blackberry addict, who also uses the laptop to connect to the internet. Yes, there is overlap. Actually, the number of mobile phone access to the internet is significantly more than 350 million. Again my consulting company has been tracking the numbers from the start of this phenomenon since I first talked about the weird aspects of Japanese mobile internet use in 2000, and now in 2008, we've seen the cross-over point for the planet.

THE WINNER TAKES IT ALL

For the first time now in 2008, there are more people who access "browser-based content" - here a clarification, as there are several definitions of a "mobile internet" and I want to be very clear, I include WAP and i-Mode and other such mobile browser access, in addition to "real internet" access. But yes, accessing Google or eBay or Yahoo on your phone, even if that is via an operator portal, it is for the mass customer base, the same as accessing Google, eBay and Yahoo on a PC. They count it as accessing "the" internet. Google is Google. Yahoo is Yahoo. I don't care about some professional expert's semantic distinctions about what is and what is not "the interent." If a regular consumer in America uses his Motorola Razr via Verizon to access the Weather Channel's mobile web page, that consumer says that the experience was using the internet on the phone. That is all what really matters. What do the consumers say.

And browser-based content is now accessed by more people using a mobile phone than using a PC on the planet. There are 1.02 billion people who access the internet on a mobile phone versus 950 million personal computers connected to the internet. The mobile phone is already the majority of internet access in countries from the most technically advanced such as Japan, Taiwan and South Korea, to countries that are poorest such as India, Kenya and South Africa.

And I do want to be clear about this, so I'm sorry if you've heard this before. But the number of users is not the same as usage. So yes, heavy usage - and most of the internet traffic and most of the time spent on the internet - will continue to be on PCs, not on mobile phones. At least not early on. Probably the usage and data traffic on phones will increase over time. Still, lets be clear, the user number is not the same as usage or total time spent online or the amount of traffic. Nevertheless, the first step has been taken. More people now access browser based "internet content" using a phone, than using a PC. And this is a strong trend, there is no going back.

THE DAY BEFORE YOU CAME

If you have a consumer-oriented website, especially if you are a global brand - shouldn't you now be taking steps to make sure your site is also suited for mobile phone based internet access? Isn't it time to register for a dot-mobi domain for yourself (Bank of America had a million visitors to its mobile site), and to instruct your web designers to test and optimize your websites to serve also mobile phone access? It does change things. Not so many of the "cool" but data-hungry graphics and animations and videos that the designers like to stick on the welcoming page. If you access on a mobile phone and are in a hurry, and you are charged for the data transmitted, the last thing you want is for a heavy data file to load.

Before, we didn't need to care. The mobile phone internet was a weird peculiarity "only in Japan" (and then South Korea) and unless you were a major consumer brand operating in those countries, you didn't need to care. But now, 2008, its become the predominant form of internet access on the planet. Now we all have to care. Even if the majority of internet access in "laggard markets" like the USA, is from legacy internet methods like a personal computer.. If nothing else, think of the iPhone. In a couple of years, the majority of all phones will be more capable internet devices than the iPhone is today. Time to prepare. Time to smell the cellphone. Its not the dumb little brother of the internet, mobile is actually the newest mass media channel (the seventh mass media as we say).

WHEN ALL IS SAID AND DONE

And while we're on the internet, you use email, yes? A giant global communication system. There are as many people using email, as there are total fixed landline phones. A very big communication system indeed. But now there is a new kid on the block. I'm not talking about SMS text messaging (that is the biggest data application on the planet, far larger than email, I'll talk about it later). I'm talking about MMS.

MM-what? Picture messaging. MMS the Multimedia Messaging Service that has a potential reach today of over 1.9 billion phones (meaning the phone itself, and the network it is connected to, support MMS picture messaging). If you want to send commercial messages - ie advertising - or news or entertainment content that is of multimedia type (pictures, sounds, videos) then MMS is a system that is out there. It has a reach that is twice as large as the installed base of all computers. And it is 35% bigger than the installed base of television sets. Did I get your attention?

"But nobody uses picture messaging. I don't use picture messaging. Its a stupid technology." Ha-ha, yes, I hear you, but remember how you felt about SMS text messaging just a couple of years ago? Lets examine the evidence, shall we? Nearly half of Asians send picture messages...

..Oops? "Excuse me, Mr Ahonen, what did you say? Did you say nearly half of Asians?" There are 640 million mobile phones in China alone. If half of those send picture messages, then the active MMS user base just in China, is more than the total population of the USA..

Yes, almost half of Asians, 48%, use the MMS messaging system and mostly send and receive picture messages with it. Now, toss in 25% of Europeans who use MMS.. We don't need many older people like you and me, and we don't need many Americans to use MMS picture messaging if we have half of Asians and a quarter of Europeans doing it. The numbers come out at ... drumroll.... suspension rises ... more drumroll... how big will it be... drumrolll.... the active user base of MMS picture messaging is 1.3 billion people today.

Yes. This year 2008 for the first time, there are more active users of MMS picture messaging, than there are active users of email. Still think MMS is not relevant? (Paging the mathematically-challenged in Cupertino.. Apple-a-hoy ! More global users of MMS than email? When will you do the simple math, and add the coupla lines of software code to make your iPhone compatible with the second most used messaging standard on the planet? Yo-hoo, Apple ahoy, anyone awake up there?)

Again lets not misunderstand this. The definition of "active user of MMS" in most networks is someone who sent one MMS in the past month. We're not looking at massive amounts of traffic (yet). But we are looking at enormous reach, and a radical new way to communicate on our phones. If you want to reach an audience and you have a picture or video, you can reach 1.4 billion TV sets, or 1.2 billion email users, or now, you also have the choice of 1.3 billion people who already use MMS multimedia messaging. More than that, in the Developing World, MMS has a far wider reach than TV or the legacy PC based internet. MMS is rapidly becoming a favoured method for mobile advertising for example. We've reported on many examples ranging from Blyk to the BMW winter tyres campaign we discussed earlier.

ON AND ON AND ON

Then lets talk text. SMS text messaging has been the biggest data application on the planet for many years already but it keeps on growing dramatically. Now we have passed the 3 billion active user level. 76% of all mobile phone subscribers are active users of SMS text messaging. 3 billion texting users is obviously three times the population of computers on the internet, and twice the number of television sets and 2.5 times the number of email users.

Its so powerful, SMS text messaging is not only replacing email use, and single-handedly killing the voicemail traffic, SMS text messaging is now replacing voice calls. Not only in poor countries - in India for example 30% of mobile phone users never initiate voice calls at all - but use text messaging. It is also in wealthy countries, where SMS text messaging is found to be far faster to reach the person with the message we want, than using a voice call - and SMS texting is also the more discrete (secret) method of communicating, useful in anything from sending secret notes in school, to sending a joke to a colleague while in the same meeting, to sending important messages to the boss, while sitting in the taxicab sharing a ride with your biggest competitor. In all of these cases, a voice call is totally inappropriate, but an SMS text message works just fine. And only SMS works this way with 3 billion people. A Blackberry wireless email would only work if the other person also has a Blackberry (or is sitting at the PC with the internet connection live and has email notification enabled). Yes, the shift from voice calls to texting has been reported in countries as far apart as Ireland and New Zealand.

Three billion people send SMS text messages. I was preaching the SMS story to totally hostile audiences in America back in 2000. Now, after season after season of American Idol, and then the Obama campaign, finally now, in 2008 the American view is shifting and willing to accept, that perhaps, yes, SMS is something special. The rest of the world knows this. The Finnish Prime Minister says on his voice mail, don't leave me a message, send me an SMS text message instead.

And as we discuss the Trillion Dollar Baby, yes, SMS is a significant part of that. Mobile messaging is worth over 130 billion dollars this year. The vast majority of that - over 100 billion - is basic person-to-person SMS text messaging. The majority of the rest is premium SMS (ie American Idol votes etc) and MMS picture messaging. Wireless email and Mobile Instant Messaging form a tiny sliver of about 5 billion out of that. Tiny yes, but even so, five billion is more than what the legacy internet earns out of all messaging revenues it can generate. And mobile messaging is worth 130 billion dollars this year, growing at rates of 35% per year.

And to all those who pray at the altar of the RIM, singing hymns to the addictive nature of 24 hour email in their pockets, clutching their Blackberries, like a bizarre cult. Yes the Crackberry is a nice device. But the email ability of the Blackberry is a crutch for digital immigrants. It is a crutch. The real power in messaging is in SMS, not wireless email. In fact, the email ability of the Blackberry is a red herring. It is the "non-email" messaging on the Blackberry where the truth lies. The biggest user group after enterprise customers to use Blackberries - are heavily SMS-addicted youth who want a good keyboard for their texting addiction. That is why they sell far more Blackberry handsets, than the total number of Blackberry subscribers in the world. It is a great SMS text messaging device, that happens to also do email. Not unlike the Nokia Communicator series (which long pre-dates the Blackberry and has a far larger user base globally, while being far more expensive than the BB) which was the first mobile phone with the real internet and email, from back in 1997.

Hey, I'm not against my Canadian friends over at RIM, they've done a great job moving their iconic emailing smartphone to a wider appeal with inbuilt cameras, good screens, etc. Just the notion that wireless email "like the Blackberry" - that is my gripe. Email is like so last decade. It will not be the paradigm on mobile. SMS text messaging is the biggest data application on the planet. There are 50 times more active users of SMS text messaging than users of wireless email on the Blackberry and all similar devices and services.

Oh, about those aching thumbs? The world average is about 2.5 SMS sent per subscriber, or nearly 4 SMS sent by active user. The world leading country continues to be, of course, the Philippines, which has led in this category since national statistics were first reported. The average Filipino mobile phone user sends 25 SMS text messages every day. That is the average user. Heavy users among the youth from South Korea to the UK, send 100 SMS per day on average. That will put a cramp on your thumb really fast..

MONEY MONEY MONEY

So three out of four mobile phone subscribers use SMS text messaging actively. That is a very large number and we are now nearing the limits of literacy. Yes, there are people for example in Africa, who are illiterate, but who still use SMS text messaging for example to retrieve payments, that are transmitted using SMS (Look at M-Pesa for example, the mobile phone based mobile payments system "we are not a banking service" which is in reality a mobile phone banking service but Vodafone, its parent, has to be very careful with the local banking regulations, so M-Pesa is not a banking service. M-Pesa is the mobile payments system that would be 20% of all banking accounts - please do note that M-Pesa is not a banking service - and M-Pesa is used predominantly by people far too poor to afford opening a real banking account in Kenya).

Oh, you thought 20% cannibalization of the local banking industry is surprising? Yes, in the developing parts of the world, where every economically viable person has a mobile phone, but does not have a PC or television set or credit card or indeed, a banking account - mobile phones become the digital wallet. It is normal for employees to be paid their full salary to their mobile phone ("non-banking") account. This is commonplace already not only in Kenya but in South Africa, the Philippines, etc. And then the payments system expands to cover the phone in many other areas. We've seen mobile phone operated vending machines all around the world, no problem. But more serious payments are handled by phone. In India you get a 5% discount if you pay your utility bill using your phone, because it is more efficient for the utilities to handle the payment transfers electronically than using cash payments. In South Korea half of the population already makes payments using a mobile phone. In Japan 17% do so. In Finland, on Helsinki's public transportation system, of the single tickets sold to the trams, 58% are now paid by mobile phone. In Estonia, if you park you car, you better have your phone, because the parking meters don't take cash, the only way to pay is with a mobile phone. I believe its the first case of a local payment function, that has shited 100% to mobile payments. It won't be the last.

GIMME GIMME GIMME

We have the newest Trillion dollar baby, and it is growing really fast. In this blog posting I only focused on the big picture items, and didn't even touch upon the content and services that are in this space. I'll do that in a separate blog posting soon. But yes, now the numbers to remember for 2009 - there are four billion mobile phone subscribers on the planet. That means 3 billion unique mobile phone owners, who carry around 3.4 billion mobile phone handsets everywhere they go.

The industry sells 1.2 billion new mobile phones every year. The phone in your pocket is as powerful as a supercomputer only 20 years ago or the laptop that is 5 years old, and the capabilities and functions grow at breathtaking speed, partly because the replacement cycle globally is down to 15 months. There are 1.9 billion cameraphones in use today.

For the first time now, the majority of internet access is from a mobile phone, no longer from a personal computer. Also for the first time, MMS multimedia messaging, or known as "picture messaging" has more users than the total users of email.

Meanwhile, SMS text messaging continues its climb as the biggest data application in the world, used now by 3 billion people.

Mobile messaging is worth about 130 billion dollars. Mobile voice is worth about 600 billion dollars. The mobile data and content industries are worth about 70 billion dollars. The total mobile services industry is worth about 800 billion dollars. The handsets business is worth about 150 billion, and the network hardware rounds out the remainder, a bit under 50 billion, to bring our total to one Trillion (1,000 Billion) dollars.

HAPPY NEW YEAR

For anyone wanting to quote any of the numbers, except where mentioned specifically, all others information source is TomiAhonen Alamanc 2009 which has sample pages at http://www.tomiahonen.com. All of the numbers and any passages in this blog may be freely quoted - I will appreciate it, if you will include a link to the blog so your readers can find this article too, for background, if you're reporting this story.

PS, a small update on the non-mobile stats. I had used Economist Yearbook stats from 2006 on some of the global GDP numbers. Those had changed probably due to the decline in value of the US dollar, so I have updated the global GDP, and USA and Japan GDP numbers to their current levels. My thanks to Professor John McCann of the Fuqua School of Business at Duke University who pointed this out.

Comments

[Cellular Motorola Philippine Phone]

Hey, this is pretty good stuff! Although this is my first visit here, I find your blog and your posts very insightful. Keep up the good work.

Arrielle Green

[John]

Tomi:

Very interesting statistics. We would love to get a copy of your report. Please send a copy to me at [email protected].

You might also be interested to see our website at www.mobilephonebanking.rbap.org, our blog at www.blog.mobilephonebanking.rbap.org and our videos at www.youtube.com/rbapmabs.

We have been promoting mobile phone banking and mobile payments for low income households in the Philippines for four years and have seen the transactions triple almost every year since 2005.

Feel free to link to our website, blog, or youtube videos.

John

[Tomi T Ahonen]

Hi Arrielle and John

Thank you for the comments.

Arrielle - happy to have you visit us and hope you'll return many times more. We focus on the "communities dominate" space on this blog, so its about digital convergence, user-participation and new media here. Mobile is an increasingly important part, but not the only topic at this blog, we also focus on broadband internet, multiplayer gaming, blogging, virtual worlds, etc.

I have a parallel blog that focuses only on mobile, at www.7thmassmedia.com and you might check out that as well.

John - thanks, good links. Yes, the Philippines is one of the surprising leadership countries, in areas such as SMS use, mobile banking and also for example social networking. I keep telling colleagues around the world to keep an eye on the Philippines, a very advanced market and one that is often under the radar of many observing this industry.

Thank you both for writing

Tomi Ahonen

[Giff Gfroerer, i2SMS]

Tomi,

You mention the Obama SMS campaign's use of SMS. For the announcement of his VP choice, it is believed over 2.9 messages went out... That surely must be some kind of a record. It was here in the States.

As for U.S. adoption, Nielsen estimates 57% of US subscribers over the age of 13 text, and the average US subscription sends 357 SMS messages/month versus 209 calls.

It is here.

Giff

[Tomi T Ahonen]

Hi Giff

Good comments. Ha-ha, yeah, 57% of all subscribers. I'm sure its big news in the USA.. but the world reached that level in.. in... in..... 2003. Haha. Yeah, I am happy the USA is finally discovering SMS, but it has been a very long time coming

I also find it quaint that Nielsen bothers to say "over the age of 13".. Mobile phone ownership is creeping down the age and 7-8-9 year olds get phones now. Why stop the interviews at age 13. Why not simply say "out of all subscribers" and include a couple of pre-teens in the interview sample ha-ha..

About the Obama campaign. I have heard it time and again, I think it is even more noticed by the mainstream US industry than American Idol voting has been (even though they had ten times the reach ha-ha). Perhaps it traces to the iPhone - after the launch of the iPhone in June 2007, the US industry has been willing to see solutions built onto cellphones. Prior to the iPhone they seemed to be blind to the cellphone.

But you are very correct in the summary - yes, the USA has now warmed to SMS and very rapidly is discovering that - a) it is far better to send an SMS than to leave voicemail (so voicemail can start to die off in America as it has slowly been ending its life in the rest of the world) - that b) SMS is the fastest way to communicate (hence already the bigger use of SMS than voice calls on cellphones) and c) - SMS is the most discrete way to communicate.

Then Reachability kicks in ha-ha - that is what is really driving the SMS addiction and we saw it much more in the Obama Campaign than in American Idol - and now you HAVE to carry your cellphone everywhere (including the bathroom and bedroom) simply because you need to be reachable when that one really important message arrives ha-ha..

Yeah, don't think SMS will slow down in America. It will grow really much now, that you're past the 50% level. email, its so last decade..

And your company i2SMS, Giff, is in the right place to help your customers capitalize on this opportunity.

Cheers

Tomi :-)

[Edu]

From my experience with teenagers on the mobile operator i worked for, they send a ratio of 2.5 SMS per 1 call. This is supported by 3 full years of call data.

[Henry Sinnreich]

Great source for numbers and very credible!
As for the trend, here is another perspective:
There is only one service. It is called the Internet.
Wireless will become just another wire into the Internet and mobile messaging will be just another Internet application, possibly free, just as Skype IM. The issue is not if, but only when and how. It will be interesting to watch the evaporation of SMS revenue and the struggle to hold on to it. Remember Fax? Oh yes, it is still around somewhere...

[Tomi T Ahonen]

Hi Edu and Henry

Thank you for the comments. I'll respond to both individually

Edu - great point, and I've seen very similar findings globally, the pattern holds. For example in the UK there were numbers that the youth average 2 minutes of voice calls per day, but six SMS text messages sent. Very similar to your numbers.

Henry - good point. And let me start by saying that this is a debate that has raged for this whole decade and I've been involved personally with it for a decade already back from when I was employed by Nokia and I wrote their first White Paper that discussed how to deploy the internet on mobile networks, which is literally ten years ago next month ha-ha.. Funny how times flies.

But yes, I've seen the arguments, and there are strongly held views on both sides. Note that I started my career at the first Internet Service Provider in New York, and then worked in the telecoms convergence of one of Finland's two incumbents, and then at Nokia's digital convergence unit, so I've been at this for a very long time and seen the industry from the inside from all sides..

With that, I've discussed the "one internet" and the "mobile internet" literally hundreds of times on all six inhabited continents with some of the best minds in the business from both sides of the aisle.

I have also published my views in my books so this is no surprise, I am of the mind, that the internet is the sixth mass media channel, a unique service creation environment and media channel and communication channel and commercial environment and delivery platform. But it is the sixth (Print, Recordings, Cinema, Radio and TV are the first five mass media).

Mobile is NOT the simple crippled tiny cousin of the internet. The phone is also not the complete "end-state" for the internet experience. Mobile is the seventh mass media channel (and a communciation channel, commercial environment, delivery platform - but also what the internet cannot be, mobile is a payment channel. By this I mean, unless you subscribe to Paypal or give a credit card, the internet cannot - as it currently exists - handle payments in its native form; mobile can, and it is only up to the individual operator - and the local banking regulations, if that is done. 20% of all banking accounts in Kenya are on phones and these are basic phones with SMS and at best, WAP).

Anyway, the "mobile internet" will seem much like the existing internet, much like television seems like the cinema or listening to hit songs on the radio seemed like listening to your records (recordings).

But mobile has seven unique benefits that the internet does not have (we discuss them many times on this blog and for example in my newest book).

So, yes, you can bring the "legacy internet" onto a phone, like surfing the "real internet" on an iPhone. Yes, this can be done, and yes, it can be a nice thing for "internet users".

That is not the same as the mobile internet. The mobile internet has far more revenues out of content and services than the internet, already today in 2008. Services that cannot (in their current form) be deployed on the internet. SMS text messaging (and yes, I now there are work-arounds to allow sending of SMS from email, and delivering SMS to email, but this is a work-around, not implementing SMS on the internet). SMS alone is worth 100 billion dollars. more than all paid messaging revenues, all paid content and advertising revenues on the internet.

Thats just SMS. Then how about ringing tones? Ringback tones? You can't do those on the internet. Music sold to mobile phones is 5 times bigger than the total iTunes and all other such online music sales.

This is what I mean. Yes, what you say is kind of true, yes, there is an internet (tiny industry) which desperately wants to get into our pockets (Google CEO says the internet will be on mobile, Yahoo CEO says the internet will be on mobile, Apple removed "computer" from their corporate name to get into mobile with the iPhone etc).

But that is peanuts. The FAR bigger industry is the mobile data services industry, which is very healthy, wealthy and wise. They have far better services than the internet - look at SeeMeTV - where the average creator of a video - average creator - earns 27 dollars out of his video when it is viewed by other members of SeeMeTV. You can't do that on YouTube on the internet (in a practically commercially viable way, today). This can only be done on the mobile internet.

So yes, I hear you, but I am convinced of my view. I think I will be posting about this soon, to give a more thoughtful and complete view, to explain it better. But I think you can see from the above, that I have plenty of evidence to support my view and it comes after two decades in the internet business and over a decade in mobile and literally a decade in the "mobile internet" industry as a published thought-leader and commentator..

It doesn't mean I am right. I know the countering view has lots of support. But I'll return to this at the blog and give a more considered commentary. Obviously this view is for example in my new book in the mobile internet chapter... I like to say, that to put the "real internet" onto a phone, is as futile as putting a real horse into a car for horsepower.. Yes you can do it, but it really brings no inherent value, when you have a far more powerful engine to begin with..

Thank you for writing, both of you.

Tomi Ahonen :-)

[Tomi T Ahonen]

PS - Henry about SMS

Hey, sorry Henry, you specifically talked about SMS and I should respond to that explicitly.

I have heard this "SMS will be cannibalized" stuff for a decade too. And that the Blackberry will eat its cake and that instant messaging and chat will kill SMS and free SMS providers will appear and unified messaging will kill it, and mobile instant messaging will end SMS etc.

It might happen on a very long time horizon. But currently, all signs, in every single market on the planet, is that SMS is growing in usage and users and revenues.

The reason for that is that SMS is addictive. Proven to be addictive in university studies from Belgium to Australia. In fact, proven to be the most addictive major communication service (more than email, more than voice calls) and AS ADDICTIVE as cigarette smoking.

The other reason is that there is something called Reachability - I discussed it first in my second book M-Profits. Our addiction is not born from a need to send other people messages, it comes from the need to be able to be reached. We cannot anticipate when something important happens to one of our friends or colleagues, but having the mobile phone with us 24 hours a day, and having SMS - which can reach us even when we cannot talk - is the biggest key to Reachability. Since the, the Blackberry - to older users - has achieved similar dependency and for the same reason, not for the calls, but the emails.

Blackberry is a mild drug. The heavy drug is SMS. So your argument, that it will go away is not so likely.

Note that on the internet anyone can put up a rival service. On mobile - nobody can place a rival service onto your phone, if your network operator decides they don't want it. Nobody can. It is a licensed spectrum and a small number of carriers/operators who are licensed to use the spectrum. the networks cost a billion dollars - per piece - put that into context with broadcast technologies or internet infrastructure costs - the global 3G telecoms network upgrade was the most expensive infrastructure investment in mankind's history. This industry is well protected by an oligopolistic market place and by limits of spectrum availability. The mobile operators/carriers earn about half of their total profits out of SMS text messaging - yes, more profits from SMS than voice calls even though voice calls consist of 75% of total revenues. They will guard SMS profit margins jealously.

I have seen many a business idea launched - and failed - on the idea of cannibalizing SMS. So far no winners. Not that it can't be done, only that it is unlikely to succeed in most markets in the near to mid term.

The internet coming to take over the mobile data market space. I don't think so...

Thanks

Tomi :-)

[Jagdish Nailwal]

Hi TOMI,
It was a pleasure to visit your blog, as it was referred to me by one of my respective Friend. Blog is very very interesting and very informative ..

I work with a 3rd Party Logistics Company in India. and my focus area is Telecommunication and i am sure, with all its facts and figures, it will help me out to work on my field very informatively.
Kindly send me the detailed report which you have mentioned about.
My email address is [email protected]

best regards

Jagdish Nailwal.

[Tomi T Ahonen]

Hi Jagdish

Thank you for the kind comments. I sent you the report.

Tomi Ahonen :-)

[Gokhan Dogan]

Great post !
Regarding the dot-mobi domains; a lot of companies -including Verizon- think that it is a waste of time. What is your opinion on that ? Will that bird fly ?

3G will be available in Turkey soon and I predict that the mobile internet usage will boom as Turkish population has an average age of 28 and there are still lots of things to do. I believe it is an untapped market. Look how Vallimo and Turkcell cooperated and became one of the most successful "mobile signature" projects in the world. As Finland and Sweden has the years of 3G experience, I think they can bring a lot of value to Turkey and of course take-away a lot of money :)

[Tomi T Ahonen]

Hi Gokhan

Thank you for the comments and very good points.

First on Dot Mobi and "a lot of companies including Verizon". So let me go into my "Anti-America rant once again." America is the laggard in mobile. Generally they totally don't understand this industry and make silly comments and statements and actions - ranging from Sprint firing 1,000 customers "for complaining too much" while the network was America's worst company by customer satisfaction, not just worst telecoms company, worst overall.. (and this moronic action of punishing customers when your own processes make you that bad, resulted in the CEO being fired in the next quarter and the chief marketing officer fired by the new CEO). Or that AT&T raised the costs of SMS where Americans already pay the worlds' highest rates per SMS (as they are among the very few countries where both sending messages, and RECEIVING messages, yes all domestic inbound SMS too - are charged to the customers)..

I track the industry and have found that North America generally, USA and Canada, have lagged typical European countries by 4 years. That has now improved in the past few years and now the USA has caught up with the tail-end of Europe, roughly on par with say France, Belgium and Greece, that kind of markets. Still a year behind the UK, and three years behind Japan..

So if any of the "a lot of companies" in addition to Verizon are based in North America, I would not put much weight to their "considered opinion" ha-ha..

It does not mean that Europeans (or Asians) are always right and Americans always wrong, but generally, the most insightful thought-leadership tends to come from the countries which are the leading edge of a given industry. We don't go to study rocket science in Zimbabwe, for example (with all due apologies to any rocket scientists who happen to be Zimbabweans..)

But there also no doubt are many companies and experts who doubt the Dot Mobi concept, regardless of their geographic location. And even Americans can get it right, so lets get to the main point.

I think there are two issues embedded within your question. The first is that a "mobile web" experience is distinctly different from an "worldwide web" ie legacy internet and PC based experience. I write about this for a whole chapter in my newest book, Mobile as 7th of the Mass Media, so I go through for example the "30 minute and 30 second" metaphor. In that I show that most PC tasks - ie typical legacy internet tasks - are ones we "plan for" and spend about half an hour or more to do. We do it sitting down, and want a good keyboard, mouse, and good big screen. A PC environment.

On mobile we do 30 second tasks. These come suddenly, urgently to our pocket. We deal with them on the spot, not planning time "to get back to it". We do the 30 second tasks often standing or walking. We do it single-handed using only a keypad, with something heavy in our other hand, our briefcase or our grocery shopping our the steering wheel of our car, or the hand of our child as we cross the street, etc.

The whole experience of "surfing" is different on mobile. We don't pay full attention as we very often are multitasking with the real world or other media, while we deal with the phone. We may be watching TV for example, or be online with our PC, sending an email, when an urgent SMS arrives on our phone and we deal with that on the spot with the phone.

So part of the philosophy that Dot Mobi has been pushing globally and I think quite successfully, is to expand the knowhow and insights into what is needed for a successful mobile web experience. You can't just copy the internet and try to squeeze that to an iPhone and hope for success. It may work - some websites by accident do - but most don't. It takes a lot of customization, that a familiar looking site is still mobile-optimized. Flirtomatic is a great example of that. It is clearly Flirtomatic both online and on mobile, yet the mobile experience is truly optimized for 30 second tasks and has consequently 8 times more activity per Flirtomatic member, than the online variant.

So is the Dot Mobi "philosophy" useful, needed, will it fly? I think certainly yes.

Now, do we specifically need a "dot mobi" ie .mobi domain for our brands? I do personally think it is a good idea, and for any significant global brand (any consumer brand that tracks its brand awareness internationally) including all the Nikes and Adidases and Cocacolas and Pepsis and BMWs and Toytas and Levis and Armanis etc etc etc. I think it would be very short-sighted of them not to get a dot mobi site (and risk that someone else gets that site).

But yes, it can also be done with other domain naming standards, so its not the only way to signal a mobile optimized site. I would not think of it as an absolute dichotomy, an either-or situation, I think most major brands should use several domains to point to their mobile-optimized sites.

The relevant stat is that last year for the first time, more than half of all browser-based web surfing, came from mobile, not from a PC. While the majority of those users are in Asia today, this is a global trend and even in America the transition is past the 20% point and Europe is nearing 40% of all web surfing coming from mobile. So all brands should train their web designers for mobile, and start to prepare for the day, when their website default page is mobile, and the PC (large format) page is an option; much like web paged started to add international language editions early on and today most international brands let you switch languages on the front page, and it takes the default language based on the IP address of where you arrive from..

Now, about Turkey. Yes, a great opportunity. We've been waiting for several large markets to join in 3G - China, India and yes, Turkey among the big population countries still missing. It will be a great expansion opportunity, and as it is one of the first countries to go 3G in the era after the iPhone, I think the whole expectation of mobile content and mobile web surfing will be dramatically different from what the early assumptions were for 3G back in 2000 or so when most early European markets were planning for their 3G launches (which then were delayed till 2003, but thats another story).

Thanks for the comments

Tomi Ahonen :-)

[Vincent Dekker]

Hi Tomi,
Very, very interesting indeed! I've written about it on my blog, see: wwww.trouw.nl/internet30 (alas, in Dutch...) Now that I'm writing a bigger piece for the paper version of the newspaper Trouw, I'm wondering if you can tell me whether mobile and landline telecom combined add up to 1.6 trillion dollars (you mention mobile voice with 600 billion being bigger than fixed landline telecoms)? And is mobile and landline telecom combined a bigger industry than food and armaments? And thus the biggest industry in the world? Thanks for all your insights!
Vincent Dekker, journalist writing for the Dutch daily Trouw.

[Tomi T Ahonen]

Hi Vincent

Hey, I have to stop by at trouw.nl and practise on my very rusty Dutch ha-ha, I can barely read it by guessing half ha-ha...

Great story you are on and good guess on the combined size, yes. Actually about 1.8 Trillion, because mobile is worth 1B, fixed telecoms about 550 B and the internet industry worth about 250 B

Bigger than armaments and defense, yes, but not bigger than food, which is several billion in total size. But the media industries combined (TV, radio, print, cinema, videogaming - and internet) combined are about 1.7 billion, so yeah, telecoms when taken all together, is just now becoming bigger than all media indsustries put together..

Vincent, also please write to me at my email, and I'll discuss with you more there. My email is tomi (at) tomiahonen (dot) com

Tomi :-)

[Joanna]

Hi Tomi,
How are you? Thanks for the numbers included in your article. I have a question for you however. In your article from 1-8-2007 you give the same numbers of credit cards, TVs, telephones penetration and other as in this one - which is a year later! Does that mean that nobody got TV sets in 2008 or did you just not research the stats for 2008?
Joanna

[Tomi T Ahonen]

Hi Joanna

Ha-ha, thought you'd catch me out? Actually if you go to that 2007 January posting - it is permalinked at this address:

http://communities-dominate.blogs.com/brands/2007/01/putting_27_bill.html

You'll find that I have adjusted almost all numbers. So if we ignore the mobile numbers, the credit cards went up from 1.4 to 1.7 billion, the number of fixed landline phones is coming down from 1.3 billion, the PC number is up from 850 million to 1 billion and the number of internet users up from 1.1 billion to 1.4 billion. I have adjusted the numbers. Except for TV. TV did grow, but since that posting, I found newer and better ITU data which for 2007 said 1.3 billion TV sets, so my number of TV sets two years ago was too high. It has also grown and is now a 1.5 billion worldwide.

The numbers do evolve over time, also at this blog and in my books. But the numbers for mobile grow much faster.. Thanks Joanna.

Tomi Ahonen :-)

[Joanna]

Thank you! That clears it all up! :)

[Hez]

brilliant stuff - many thanks!

[Glasgow Builders]

Many thanks for the article- it gives you a great perspective on what is going on on the global market.

To be honest I still think MMS technology has no real future. For short messages people use SMS, for more content-rich messages they prefer to login to their email account through a mobile phone or connect to their friends through a social website.