The Convergence of Megatrends? When All Roads Lead to 'Mobile'

A decade ago there were many new technology areas that seemed roughly as promising. And in fairness, the promise of 'mobile' was actually more risky, even more doubtful because of the vast expenses involved in '3G' technology. There were some pundits and forecasters who even suggested 3G would bankrupt the whole mobile industry.

Since then mobile grew and boy did it grow. Over the past decade mobile was the fastest-growing major industry on the planet and by year 2009 mobile passed the 1 Trillion dollar level in annual income, becoming one of the biggest industries on the planet. So to be clear, mobile today is far bigger than broadcast media (television and radio combined) and far bigger than the computer and IT industry, and far bigger than music, movies, videogaming, the print industry (magazines, books and newspapers) etc etc etc. Mobile accounts for about 2% of the total GDP of the planet, and sits with a rare few other giant global industries like the automobile industry, housing/construction, food, military spending, banking etc. But mobile, as an industry, is only 32 years old today (commercially launched in the autumn of 1979 in Japan) and among industries that are worth more than one Trillion dollars, mobile was by far the fastest-growing industry to reach that milestone ever. We have witnessed the birth of the fastest-growing industry ever seen by humankind. Thats pretty dazzling, isn't it. And no wonder we see such astonishing success stories in mobile as Apple and Google and Angry Birds.

MEGATRENDS CONVERGING

But that was the past. What about the now, leading into the future? I put it to you, visitors to this blog, that we are facing a moment in time, that has more giant industries converging into one point, than ever before. So I am not talking about the evolution of mobile 'from the inside' of mobile. I mean looking at others from the outside of mobile.

Mobile cannibalized voice calls from the fixed landline telecoms business. Today if you telephone someone, in 5 cases out of 6, the phone that answers will be a mobile phone, not a landline phone. Similarly email just celebrated 40 years of age last year. Mobile messaging entered consumer use in Finland only 18 years ago and is already far larger than email. SMS text messaging, the world's biggest data service has 3 times more users than email (SMS has 7 times more users than Facebook). But that was still 'communication' and if we offer mobile communication, it is quite reasonable that the utility of a mobile phone or mobile messaging device will soon drive the mobile side to dominate communications. What of non-communication uses of mobile?

The content services on mobile started in Finland in 1998 with the advent of the first downloadable ringingtone. We've seen basic ringing tones outsell MP3 files in digital downloads. We've seen subscription music services appear on mobile starting with ringback tones which are now bigger in revenues than global iTunes music sales. The second big area was gaming (remember the Snake?"). The World's biggest videogaming company is EA Electronic Arts. Already in 2007, its CEO John Riccitello said that mobile devices help videogaming grow. We've since seen the iPhone become the world's widest-reaching gaming playtform with more gaming users than the Playstation platforms, or Xbox or Nintendo gaming devices (according to Morgan Stanley). Sony brought its Walkman brand to musicphones and Apple admitted that it had to create the iPhone because the musicphones like Sony's Walkman phones were cannibalizing iPod sales.

What of television and radio? The BBC's (past) Managing General Greg Dyke said that in the future all broadcast content will be available on mobile phones. Now we hear not only that people watch full episodes and even full movies on the tiny screens of their phones, we now have premium 'voice' services that deliver niche radio services, via the mobile phone to specialized groups and smaller audiences. In India for example the radio services (often live Cricket games and Bollywood music) delivered via cellular phone networks generate more money than the total radio broadcasting industry according to the Economist in 2010.

The PC industry? The world's first smartphone was the Nokia Communicator and while early on most PC executives were dismissive of the smartphone as supposedly being 'a real computer'. That story changed when they saw Apple's iPhone and since all big 5 computer makers, HP, Dell, Acer, Lenovo and Toshiba have accepted that a smartphone is indeed a true computer. Last year 2011 was the first year when more smartphones were sold than all types of personal computers combined (including desktops, laptops and even the tablet PCs like the iPad). Apple is the world's largest computer maker if we count all of its computer products including the iPhone.

On the internet side, the world's first full 'real' internet service on mobile was launched in Japan by NTT DoCoMo in 1999, so the 'mobile internet' is only 12 years old. But already today there are more people accessing internet services from their mobile phones than using personal computers. Google has been saying for five years now that the future of the internet is mobile. That is also what Yahoo! has been saying for many years now.

What of news? The first mobile phone based news service was introduced in Finland by the Tampere-based newspaper Aamulehti in 1995, via SMS text messaging. It took a while, but in 2011 the Associated Press Managing Editors' conference proclaimed that not only was mobile the future of news, but that while news outlets had failed to make money through the internet, they would be able to make money on mobile. So newspaper editors see that mobile is indeed a different medium compared to the internet (incidentially, that was the theme of my sixth book, Mobile as 7th of the Mass Media) but that it is easier to make money on mobile, than to make money on the internet.

Advertising arrived to mobile phones in 2000 with MainosTV3 of Finland offering free newsheadlines sponsored by advertising, via SMS. The advertising world moved slowly to mobile but after the iPhone we have seen the global mobile ad spending roughly-speaking doubling annually for now three years straight. And now we hear the endorsements. Omnicom is the world's biggest ad agency group, and its largest arm is BDDO. The CEO of BDDO, Andrew Robertson said in 2011 "We are rapidly getting to the point where the single most important medium that people have is their wireless device. It's with them every single moment of the day. Its genuinely the convergence box that everyone has been talking about for so many years." That is quite a powerful endorsement of the advertising opportunities in mobile. But what of the advertisers? Ford became the first global advertiser to say that they will include mobile into every campaign they will run in the future. They said so in 2011. And Coca Cola says the way to do mobile adverising is to follow Coca Cola's 70:20:10 rule, 70% of the money goes to mobile messaging, 20% to the mobile internet and only 10% to smartphone apps. That is well in line with US food giant, Kraft, whose mobile marketing strategy is built on 'No Phone Left Behind.'

I could go on and on and on with the endorsements of mobile, but I will end with one more giant industry - credit cards. Visa said in 2011 that the future of payments is mobile. Yes, we've had cheques and plastic money in credit cards and bank debit cards, and contactless payments like Oyster and Octopus cards, and e-money like Paypal. But none of those killed cash. Mobile money was invented in Finland in 1999 when Coca Cola introduced the world's first vending machines that could be operated with payments from premium SMS. Soon Smart in the the Philippines launched a full mobile banking and payments system around SMS and the world's first full mobile wallet launched in Japan on NTT DoCoMo using NFC Near Field Communication. Today one in five Japanese consumers use the DoCoMo system called Osaifu Keitai and branded 'FeliCa'.

But yes, returning to Visa's proclamation? Sweden was the first country to start the discussions in 2010 about the end of cash - as Sweden already has nationwide payments working on mobile and every Swede has a mobile phone. Kenya, Somaliland, Estonia, South Korea and many other countries are in the race to be the first to eliminate cash and replace it with mobile money. The Dutch merchants association is lobbying the Netherlands government to allow shopkeepers to stop accepting cash payments in Euro. But the first country to give a definite date was Turkey, who said in 2011 that by 2025 Turkey will end the manufacturing of cash. Wow. After thousands of years of cash, we will live to see the end of cash, and Turkey may well become the first cash-less country in the world.

So we have giant industries, who all see the future of their worlds heading to mobile. What of other trends?There is a giant global trend called 'social networking' which goes far beyond commerce - just witness last year's Arabic Spring and the role of Twitter, YouTube and Facebook to the revolutions. This blog was launched to celebrate the concept of 'Communities Dominate' with the signature book of this blog (my fourth) ie Communities Dominate Brands that we wrote with Alan Moore in 2005. We said social networking was the biggest change in the past 100 years. Others have put it in equally dramatic scale. Business Week said it was the biggest change to humankind since the Industrial Revolution and the Economist took a more business-oriented view, stating in 2005 that companies who would not adjust to social networks would not survive. And more recently Google's Chairman has said on Charlie Rose that social networking and user-generate content like citizen journalism was 'the defining aspect of humanity for the next 20 years'. A huge huge HUGE change to our lives, definitely. So is it more important than mobile.

Haha, funny you'd ask. Did you see that already more than half of Twitter users and nearly half of Facebook users access the service on mobile phones? And every major social network including Facebook and YouTube have said that the future of social networking is... mobile! (Incidentially, we were the first to make that claim in our book back in 2005, with Alan Moore. When we said it, years before there was an iPhone, that was a bold and controversial view. Today the whole social networking industry agrees). 

What of 'Cloud Computing' ? Yes, that is also a big tech trend. But you know what? Ask most experts in Cloud Computing and see what they say about mobile? They will say that mobile phones will be the primary access method to services that are on the cloud. Yes, Cloud Computing also only supports the trend to mobile.

I don't mean that everything on the planet migrates to mobile. We can't do teleportation (yet) so we need our cars and bicycles and busses and trains and airplanes. We can't eat 'virtual food' (yet) so we need a real food industry and the agriculture that supports it, etc. But I would dare to say, that there has never been any industry that is at the center of so many other giant industries. Yes, the internet changed a lot, but even at its strongest point of growth, the internet was not seen to disrupt as many giant industries as mobile is doing now.

That means that mobile will continue to grow. Mobile is likely to grow even more rapidly. And the numbers already today are truly mindboggling. The world has 7 Billion people and 5.9 Billion mobile phone subscriptions (said ITU at the end of 2011). Note not all of those mobile phone active accounts are 'unique users' but even by unique users that my consultancy monitors and reports on, the planet has passed well past the point where more than half of every person alive has a mobile phone in their pocket.

The world has 3.9 Billion unique users of mobile phones, who walk around with 4.6 Billion actual mobile phone handsets (bearing in mind that many of us have two phones). In Europe for example more than half of the people with a mobile phone, actually have two (or more) mobile phone accounts which mostly also means two phones.

I am somewhat of a mobile stats fanatic, and I report often on the industry numbers, so if you want to see what is the global penetration of technologies (TV, internet, landline phone, mobile etc) across the digital divide, you might enjoy this. If you want to know how many smartphones are in use in major countries, I have that in this blog about smartphone penetration rates. I often report on SMS related stats such as this blog about voice vs messaging. If you happen to be interested in the handsets side, I regularly monitor the smartphone races as the quarterly sales data are reported and this blog tends to feature smartphone related writing almost weekly. I also keep studying the abilities and aspects of mobile, such as this blog when Russell Buckley discovered the 9th unique aspect of mobile. And here is a recent blog about the use of mobile in retail. And for those who want to understand the international dimensions of mobile, I monitor the international stats and comparisons such as this chart of global mobile leadership.

We already saw that a company that recently was making losses - Apple - became the most profitable tech company on the planet - only after it changed its focus to being not a computer company, or a music player maker, but a 'mobile' company. We have grown accustomed to thinking of PC industry tycoon Bill Gates as the wealthiest person on the planet. He isn't anymore - that honor now belongs to Carlos Slim the CEO of Mexico based America Movil the mobile operator/carrier across much of Latin America. Rovio of Finland, parent of Angry Birds is spreading from mobile phone games to soft toys, tee-shirts, and into movies, television, even amusement parks. Mobile is the biggest economic opportunity of our lifetime, make sure you understand it and make mobile part of your future. And please follow this blog (and my tweets on Twitter, where I am @tomiahonen ) where I will regularly give news and updates of the mobile industry, from smartphones to SMS and from apps to the mobile web. 

PS - I was quite stunned to find that a measurement by Forbes found this blog as the most influential blogsite about mobile matters. Thank you to my readers for engaging with me here. Communities Dominate!

Comments

[cycnus]

Hi Tomi,

Congratulation on Forbes things. I hope your article on Nokia/Elop would got bigger attention.

[mobileHolly]

All roads do indeed lead to mobile. Thank you for expressing it so eloquently, Tomi.

Now I am looking for case histories of companies that were not mobile, lost customers (bounce rate), became mobile, and actually increased sales by a measurable percentage or dollar figures to persuade otherwise "too busy" small business owners to jump into the fray. Suggestions?

[Henry Sinn]

Tomi,

As usual, well stated article. Happy New Year.
"It's only just beginning" re mobile, media and what we want now!. Will be in touch soon with updates.
..somewhat of a surprise with Forbes given your article re Parmy Olson / Forbes in July 09 - Well done! - [they can't deny the facts / truth]

Baron95,

I like what you've touched on..

"a collection of devices with internet access"

The operators, in my opinion for a few years now, WILL become plain old ISP's one way or another..

[Frank Racette "mobile marketing"]

I couldn't agree more. That being said I have a question for you. This might be better explained in an other post but here it goes. What will be the effect of feature phone or "dumb phones". Everybody is talking smart phones, but can't we do a lot of these things also with "dum phones". I tend to believe that as exiting as the smartphone industry is , people tend to forget the rest of the ecosystem and how much faster the industry could grow if they also gave some love to the " dumb phones" / feature phone.

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So we have giant industries, who all see the future of their worlds heading to mobile. What of other trends?There is a giant global trend called 'social networking' which goes far beyond commerce - just witness last year's Arabic Spring and the role of Twitter, YouTube and Facebook to the revolutions. This blog was launched to celebrate the concept of 'Communities Dominate' with the signature book of this blog (my fourth) ie Communities Dominate Brands that we wrote with Alan Moore in 2005. We said social networking was the biggest change in the past 100 years. Others have put it in equally dramatic scale. Business Week said it was the biggest change to humankind since the Industrial Revolution and the Economist took a more business-oriented view, stating in 2005 that companies who would not adjust to social networks would not survive. And more recently Google's Chairman has said on Charlie Rose that social networking and user-generate content like citizen journalism was 'the defining aspect of humanity for the next 20 years'. A huge huge HUGE change to our lives, definitely. So is it more important than mobile.

[Office Standard 2010]

I couldn't agree more. That being said I have a question for you. This might be better explained in an other post but here it goes. What will be the effect of feature phone or "dumb phones". Everybody is talking smart phones, but can't we do a lot of these things also with "dum phones". I tend to believe that as exiting as the smartphone industry is , people tend to forget the rest of the ecosystem and how much faster the industry could grow if they also gave some love to the " dumb phones" / feature phone.

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This might be better explained in an other post but here it goes

[Wedding photographer Nice]

I have seen this post for this first time and i am really very astonished by this post

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content like citizen journalism was 'the defining aspect of humanity for the next 20 years'. A huge huge HUGE change to our lives, def

[mailing lists for marketing]

Google has been saying for five years now that the future of the internet is mobile

[cell phone spy]

Thanks for sharing this, It is a good help for other people like me. Keep up with your good work...