Is the 50 Billion mobile subscriber number feasible for this decade?

I have recently heard several times the number that the future of mobile/cellular connected devices will leap ten-fold from today, when we have 5 Billion mobile phone subscriptions to 50 Billion, usually expected to happen during this decade.

First, lets be very clear, in the past decade we did grow 10-fold in mobile (vs only 3-fold growth in the internet for example). And yes, I do believe in dramatic growth to come in mobile, so I am all for the expectations to be big. We will easily double from today's 5 Billion during this next decade, easily! We may be growing 3-fold or even more than that. But 10-fold in one decade? That does beg the question: is this feasible.

The planet has only 6.8 Billion people. So the 50 Billion number has to include lots of devices per person, as well as a lot of non-human connections, whether devices, household gadgets, cars, etc; as well as other living beings like pets, farmyard animals and even connecting other things like plants.

LETS START WITH HUMANS

Yes, so the biggest usable number we can start with, is the human population. 6.8 Billion people. In a very rough term, we can expect that the mobile phone subscription penetration rate globally will pass about 120% human population per capita during this decade (at least). That means that the world would match roughly what is normal in Europe today.  But that gets us only 8.2 Billion subscriptions. Nowhere near enough.

Ok, lets take the UAE example (this is Abu Dhabi, Dubai etc the oil-rich Emirates on the Arabian Peninsula). The UAE became the first country to pass 200% mobile phone subscriptions per capita. If we assume that to happen for the whole planet, that would get us to 13.6 Billion.

This is our biggest number and we do need to pump it as much as possible to get us to the 50 Billion. So 2 phones per person are not enough. Lets add in a laptop per person. Whether its a netbook or iPad or Kindle or a notebook, lets say the planet gets a laptop for every person - and by the end of the decade that will of course have a 3G or faster connection. 3 mobile subscriptions per person (not inconceivable, I for example walk around daily with 3 subscriptions, have done so since 2003). If we multiply the planet's population with 3 subscriptions we pass the 20 Billion mark, and arrive at 20.4 Billion. Thats a good start. Now lets turn to our car.

GROWTH RATE

What of the growth rate? The population of the planet keeps growing. Yes, thats true. But the population of the planet today is 6.8 Billion people in 2010. By definition, all new born humans between 2010 and 2020 will still be pre-teens by the end of the decade. All will be less than 10 years old, half will be 5 years old or younger. This is not the target market for new mobile phone subscriptions. A few of the 7-8-9 year olds perhaps, but thats not enough to push us far above current 6.8 Billion level, in particular that for those few of the eldest in this group, we then have to balance out those elderly people who will be dying in this decade. In terms of a viable 'mobile phone age' population, what is the total population of 6.8 Billion people today, can be seen to be the viable mobile phone aged population a decade from now.

CARS

So the car. We've heard the internet people like Google and Yahoo say that the next internet is mobile; and in the countries where the internet is already fully mobile (South Korea, Japan etc) they say the next internet is in the car. That will give us a nice boost to our count. Imagine one day when every car is connected. Roughly a quarter of all cars in South Korea are already connected to the internet.

Or will it? The world has under 1 Billion automobiles! If we assume one car-related subscription that comes with the new car when we buy it, to connect to the maps and security systems and self-diagnostics and on-board games etc - we only add 1 Billion mobile subscriptions to the planet. Thats not much when we consider our ambitious 50 Billion target. Funny to say that, one billion is not much...  But yes, adding cars, we're at 21.4 Billion so far.

Note, the car may have multiple subscriptions, as we may for example use our normal phone service, take out the SIM card from the phone and insert it into the car's SIM card slot. That would give the car 2 subscriptions (for a short duration) but then upon our person we'd go down from 3 subscriptions to 2, as one was temporarily assigned to the car. It would not add to the total. And for the car makers, it makes no sense to split their data traffic to many mobile operators, rather to accumulate their total traffic load and negotiate with all carriers/mobile operators to get the best bulk deal for the whole fleet of cars, on one network. So only one new SIM card per car.

CAMERA, PSP

So then we have the other stand-alone digital gadgets, like the advanced digital cameras by Canon, Nikon etc; or the portable gaming systems like the Nintendos and Playstatoin Portables. Lets connect these all to 3G networks. Sounds very plausible.

Except the numbers are trivially small, compared to mobile. The mobile industry sells 1.3 Billion new mobile phones every year (with a replacement cycle of 17 months). Stand-alone digital cameras sell 103 million per year (says Morgan Stanley in 2009). Similarly pocketable stand-alone gaming devices sell 48 million units. Portable multimedia players including DVD players sell 130 million. Pocket music players including the iPod sell about 127 million units (same source for all). These numbers are very very small. Even if we add them all together, we arrive at 408 million devices per year. Even if every one of them was now suddenly made 3G compatible with a mobile data subscription, in ten years of sales we'd only hit 4 Billion more connected devices. But we should assume growth, so lets double that number and we arrive at 8 Billion connected personal stand-alone (non mobile phone based) digital gadgets. Now our cumulative number hits 29.4 Billion. We are starting to get there..

WHAT OF THE HOME?

Ah, then the homes.. We can have our washing machine connected to the web (there are some that are sold already that offer internet connectivity). And the coffee maker. What else? The microwave oven? The fridge definitely. And the (intelligent) vacuum cleaner? The problem here is that we only have 1.7 Billion households on the planet. So while yes, we can probably imagine 4 or 5 household gadgets today that could easily imagine being connected, and another couple likely to come - most obviously the home robot (South Korea already has consumer-oriented household robot stores in major shopping malls). If we say 6 connected gadgets in the home, we'd arrive at 10.2 Billion more to add to our total. This is good, now we are at 39.6 Billion.

HOME METERING

We actually have another issue with the homes too. That is metering of our utilities. Water, electricity and gas metering. The modern way to do utilities metering is with a digital meter, connected wirelessly to the network. Lets say 2 utilities meters per household, and we add another 3.4 Billion connections and arrive at 43.0 Billion. We're almost there...

PETS

So next lets connect our pets. We have intelligent dog collars for hunting dogs for example, and the dogs-to-humans translator (Bowlingual) which translates dog sounds to SMS messages for humans of what the dog is trying to say. I have no idea how many household pets there are, but I think its safe to say, the proportion of pets is far less than the total number of households, even as some households may have more than one pet.

What number is reasonable, I don't know. Lets work on the upside and say, on average there is a pet in one third of all households (my guess is that the number is smaller but no doubt someone among our readers will know it). That gives us 560 million connected pets. With a bit of rounding off, we are now at 43.6 Billion.

FARMYARD ANIMALS

Then it starts to get difficult. What of farmyard animals? Yes, there are cows that are called to milk via an old mobile phone or beeper hanging on their neck, and when the cow hears the arrival of SMS (or the ringing of a phone call - no danger, the cow won't answer so there won't be billable calling traffic to the farmer) the cow knows to come home to be milked. Except that where cow herds can be big, cows are herding animals, so all the farmer needs to do, is connect the lead cow, and the others will follow. No, cows won't get us there. We may get some millions of connections, but this math won't even start to work until we look at billions, or at least major fractions of billions.

I am sure there are plenty of uses for near field connections for all sorts of sensors to enable something like digital farming, to identify animals, but those don't need cellular network connectivity. So I don't foresee SIM cards in chicken or pigs or sheep..

TREES

So then lets move from animals to plants. I've told the story of modern forestry management, where trees are tagged with devices containing GPS-GSM chips, for intelligent digital forest management. They can actually tag trees in forests of a million trees. But these gadgets are relatively expensive, and there is no point in paying for their cellular connectivity for the 20 to 30 year life that the tree spends growing to full size before it is felled. Again I am not a lumberjack but to me the clever way to use this technology is for some forest 'manager' to go tagging trees that need to be felled, with the intelligent GSM-GPS devices. But not to tag all trees, only those scheduled for the next round of cuts in the forest. And for the tagging devices to be recovered at the saw mill, and re-used. So for a forest of a million trees that has been managed well, so it has an even balance of trees of all ages, then about 5% of the trees reach maturity any one year. Thats only 50,000 trees to fell per year. If we split that by weeks, its 1,000 trees cut per week. I don't need 1 million SIM cards, I need 1,000. Maybe 2 or 3 thousand just to have some spare capacity, but not a million per forest.. Trees won't get us there either.

What of our plants at home? Yes, we have the clever plants-to-humans communications by AgriHouse of Japan who offer the humidity sensors to plants that send SMS messages to the owner saying when the plants need to be watered. If you have 20 plants in your home, and really want this level of technology to monitor each plant, yes, we could quickly pass 50 Billion subscriptions. But I do not foresee most homes having this technology. Yes, some will love it, but most not. And even those who will use it, will probably not need it for all plants. And the technology need not have a cellular connection, the more logical way of doing this is to coordinate with the home connectivity center (a home WiFi connection center and/or femtocell for example).

OK LETS TOSS IN MONEY

We are still about 6 Billion short of the magic 50 Billion number. Ok. Then lets go radical and say mobile banking. I am a firm believer in mobile banking and mobile money and payments. I am however, very well aware that the banking and money industry moves very slowly, is very conservative. It is not rushing to mobile. And there are many technical ways to do mobile payments and mobile banking and mobile wallets, which do not all require a separate subscription and/or additional SIM card.

But one of the preferred solutions is what for example was deployed in South Korea, where on the phone you have one SIM card for your telecoms needs, and a banking-specific SIM card for all your money needs including banking, payments, credit cards, loyalty cards etc. The one SIM cards is compatible with all South Korean banks and credit cards etc, so its just a question of a given bank or provider enabling their account onto your banking SIM card. And then if you need to move your banking services to a newer phone, you can do so simply by inserting the SIM card to your new phone.

So far so good. If we now assume all 6.8 Billion people on the planet get a mobile wallet/mobile banking service that adds yet one more SIM card, we do reach the 50 Billion number. But in all honesty, this won't happen to all people on the planet (kids for example) and definitely won't happen in one decade.

NUMBER CAN BE SEEN AS FEASIBLE

But is it plausible? We had some very severe assumptions there in that quick analysis. Assumptions that are quite deadly to the target number.

Lets start with the human 3 SIM card target. That could be seen to be reasonable for adult and employed populations. But teenagers and retired people? 3 SIM cards? Teenagers, Maybe. But the elderly? One mobile phone subscription, certainly. Two, maybe. Three? Unlikely for all of the elderly. In many cases a retired couple could get one iPad style device perhaps - to share among the pair. I think the 3 mobile subscriptions per person concept is not really viable for the whole global population. Not in this decade (yet)

Next lets go to the households. We thought that each household would have 6 connected gadgets. Well, actually that number is implausible because of the lack of electricity. 1.6 Billion people live without electricity according to CNN in 2008, so if we take the average household size of 4 people per household globally, thats 400 million households without electricity. No electricity, no clever digital household gadgets either. We just lost 2.4 Billion connections and a further 800 million metering connections.

Of the portable digital gadgets, with the 8 Billion number. That was a lot of smoke-and-mirrors. A cheap MP3 player won't gain from a 3G data connection - it would be a very sad rival to a musicphone but would add the monthly connection fee, while not offering telecoms connectivity (not being a phone). Not plausible. If the consumer wants to buy a stand-alone MP3 player, that will then have very particular music needs, and that person will definitely own a smartphone also, towards the second half of this decade. No, the MP3 players will not be networked on the cellular network (mostly. Some premium iPods probably will offer the connectivity but even those, mostly will not connect to the cellular, and will rather connect via WiFi).

The worse assumption is that all 8 Billion sold gadgets are still used by the end of 2020. While the replacement cycle for non-phone portable gadgets is longer than the replacement cycle for phones, certainly a significant fraction of the total cumulative sales of that number were replacement units, of better capability, sold to the same consumer. So we need to cut the 8 Billion number down by several billion..

Then we have issues with poverty, with illiteracy (800 million people of reading age are illiterate worldwide - illiterates will not need a laptop surely, and probably won't have much need of more than one phone in most cases), with wars, famines, and refugees. The victims of natural and man-made disasters will not be accumulating multiple IT devices..

50 BILLION IS NOT PLAUSIBLE

I do like visions of big growth numbers in mobile. I do like the bold predictions to suggest big growth, to counter those who peddle the tired myth that we are somehow at saturation or near saturation in mobile. I also like the guidance by the mobilists and futurists, who look at the past decade, observe that mobile grew 10-fold in that decade, faster than any other technology of significant size - and then to argue that the same rate of growth would continue this decade, another full decade of growth of 10-fold. And that kind of provocative argument does suggest those considering the market opportunity to also focus on who and what is to be connected, to understand we will run out of humans to connect, very soon, and the growth will need to be made from other devices and gadgets and pets and so forth.

But to me, the plausible number of mobile phone subscriptions for the end of this decade is somewhere in the 15 Billion to 30 Billion range, not in the 50 Billion range. I will be most happy to be proven wrong, but just please do take some sanity checks on the assumptions. Some of the fantasies and science fiction views are dramatic yes, but the numbers do not add up. Lets try to be realistic when giving guidance about the near future.

Comments

[Ali]

Hi Mr. "crazy man" ha ha! Always great to see your thoughts, which are some of the most authoritative around.Nice explanation. I don't think that many subscriptions are possible, given the current global population and growth rates. But if we start bearing kids like that Swazi fellow... who knows? Have a good one.

[Mobile]

very informative dear but too much lengthy. As rate of population increasing so the users. Mobiles are now parts of r lives... v need change ASAP for better future
Ron.

[Zahid Ghadialy]

Tomi, there are a raft of devices that will be using the SIM's for variety of purposes. Take for example the Satnav's which a lot of people have as a seperate attachment and some do use for walking to places as well. Then there are eBook readers. There are camcorders with with data connectivity, etc. Femtocells may use SIM as well. Also it takes just one killer device (like iPhone did for mobiles) that can change the number dramatically. I think 50 Billion is possible by 2020-2025.

[Steve Cary]

Tomi - Good analysis as always. However, I think that you may be overlooking multiple device categories and segments that I think will be connected in the future. These segments are comprised within the rather generalized category of M2M (Machine to Machine). Now, I acknowledge that these categories may not be enough to tip the scales to 50 Billion, but I do know that these types of things are being connected right now. More importantly, the types of devices that are starting to be connected are not the same as are being written about in the popular trade press. I am not referring to Kindles, e-book readers or digital frames, or other forms of consumer goods transitioning from unconnected to connected. I am talking about industrial and enterprise equipment that is often hidden from view from the normal person. This includes HVAC equipment in buildings, stand alone air conditioners and heaters, lighting systems, billboards, sensors and distributed sensor systems.

Here are some examples: we work with customers who are connecting irrigation systems so that they can monitor loads, there are other customers who are implementing 'well monitoring systems' (water wells and other chemicals). There are customers who are implementing wireless video systems for remote surveillance. There are customers who are connecting industrial appliances such as blenders, vending machines, and other dispensary items. The list goes on and on, and is limited only by your imagination and the cost/benefit ratio surrounding the economics of connecting a device.

This is the tip of the iceberg for growing the connected world. I've observed a steady decline in the

module prices (both CDMA and GSM), and correspondingly, the major carriers (in United States) are starting to offer rate plans designed for these types of applications. These rate plans can be characterized as low cost, low data rate and flexible.

I think that we may all be surprised by the types of 'connected things' that are brought to market.

What will determine this is the sheer innovation of upcoming product developers and entrepreneurs who see the potential for new products, new business models and augmented services. I think the first time you see a 'connected blender' in the marketplace - you might be surprised that this is already happening.

Tomi - I look forward to you applying your focus to future discussions and analysis of the connected

device marketplace. I think that an objective, rational, 'numbers driven' view is sorely lacking from

the trade press at this time. This is an exciting, rapidly emerging yet poorly understood marketplace.

Best Regards,

Steve Cary
Feeney Wireless
www.feeneywireless.com

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[Anders Løvlie]

just thought i'd point out that there are a lot of possible connections that wouldn't need to be mobile. let's say i'm gonna connect my fridge, washing machine etc to the internet; all right, by why should that be a mobile connection? my fridge isn't going anywhere soon...

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[Tomi Ahonen]

Hi everybody

I have had a very heavy week of travel with meetings in Asia, North America and ending here in Europe now. I will be responding to all of you when I am back home in Asia hopefully starting the replies early next week. Keep the comments coming..

Tomi Ahonen :-)

[Tomi Ahonen]

To everybody

I will be replying in stages, about 5 responses at a time. Please keep comments coming. I will get to your reply for sure.

Hi Ali, mobile, Zahid, Steve, Ida

Ali - thanks. Yeah, actually human growth rate change wouldn't come in time to impact this decade. So yeah, that could affect penetrations in 2020-2025 time frame.

mobile / Ron - sorry about the length. I do this as a hobby, I have a real day job too. So i really don't have time to edit these down to short stories, I apologize for that, but my readers find value in these blog postings inspite of their length. You can always buy any of my 9 books, they are professionally edited haha..

Zahid - oh? I am surprised Zahid haha... You don't like my numbers, I am crushed.. :-) Ok, satnav, ebooks, femtocells. Actually all are in the above. Satnav runs a fraction of cars (usually one car owner will not buy more than one satnav device?) so less than all cars. Under 1B total. ebooks are a tiny fractino of all PCs, a tiny fraction. So we're looking at a tiny fraction of 300M unit sales per year and installed base of 1.2 B. A tiny fraction of that. femtocells? Household count.. and certainly not most households, how many households dont' even have electricity haha. So while all you mentioned are relevant and 'big' growth opportunities measured in many millions, dozens of millions or perhaps even hundreds of millions, we need units that sell in 'many billions' to get to the big numbers. The scale of all those cool tech devices is not relevant or even 'measurable' in the context of mobile industry numbers where we do talk in billions. Yes, good points, Zahid, but none of them are nearly big enough. Not even if somehow they grew 10x bigger, nowhere near enough to rock this scale haha..

Steve - thanks. Very valid points there, and yes, these may well amount to a billion here, a billion there, during this next decade. I don't think enough to tip the scale, but its something like the areas you mention, that we will need to discover, and connect - globally, not just a few 'IT savvy' farmers or miners or factories etc.. But yeah, I could see some more in those numbers. Lets see as the facts start to roll in. As you know, I am driven by the numbers - numbers are my buddies - and if the facts come in, I will be open here to say I have changed my mind. So far the numbers don't look very strong (yet) for quite the 50B range for the next 10 years. Half that, yeah, but not 50B..

Ida - thanks

Anders - true. But think from the manufacturer's side. They cannot know if you have WiFi in your home. If they want to put in a remote monitoring facility for maintenance reasons - then the only sure way to connect the gadget is cellular. That means inserting the GSM chip rather than WiFi and once that is in there, that becomes the consumers' way to connect to the device as well. So then looking at the home - some smaller homes will have all gadgets within reach of say a WiFi station, but if you have a big house like many Americans typically have, you could have your 'den' with the IT equipment far away from the kitchen or the washing machine room etc, and they would not even reach each other etc. So cellular does make more sense, but then the pricing issues do have to be managed obviously.

Thank you all for writing, I will return with more comments to the rest.

Tomi Ahonen :-)

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