Wireless Intelligence

Analysis: Mobile World Congress 2012 wrap-up

March 2012

The Wireless Intelligence team was in Barcelona to report on all the key developments that will shape the global mobile industry in the year ahead.
Our analysis is organised into three key areas: devices, services and networks.

Devices
Smartphones LTE devices Tablets

Services
M2M HTML5 NFC

Networks
LTE Network evolution Emerging markets

Wireless Intelligence 2012

Devices: Competition hots up in high-end smartphones

Wireless Intelligence: Mobile World Congress 2012 wrap-up
This years Congress saw a glut of new smartphones announced by a range of vendors. While there was no single stand-out device, quad-core processors were very much the feature of the day, while Nokia picked up the Best In-Show award for its 808 PureView featuring a 41MP camera - which looks like the last hurrah for the Symbian OS platform. With such fierce competition, it is incumbent on vendors to innovate as yesterdays flagship swiftly loses its lustre. Key points Quad-core processors were the must-have features for premium devices, being included in devices from HTC, Huawei, LG Electronics and ZTE Nokia broadened its Windows Phone portfolio with the launch of the midtier Lumia 610 and international availability of the premium Lumia 900 Huawei and ZTE have set aggressive smartphone targets, with the former targeting 60 million shipments in 2012, and the latter looking for a top-three handset market position by 2015 HTC is looking to regain smartphone momentum with its One portfolio Sony unveiled its XPeria P and XPeria U which, alongside its previously-announced XPeria S, form part of the firms XPeria NXT series Sony announced that it will make large marketing and advertising investments to boost sales and that it will engage with customers in new and innovative ways

Viewpoint: Different challenges for different vendors

This years event was especially significant for HTC, which is in the midst of a tough period as its device line ages. With its One portfolio, the manufacturer is looking to offer the best all-round smartphone experience, with improved cameras and Beats Audio technology helping it to this end. With more than 140 operators set to offer the device, the company is well positioned to bolster its flagging premium smartphone credentials. Chinese vendors Huawei and ZTE both have several hurdles to overcome, but their efforts at Congress show they are working to address these. In both cases, the companies lack the brand presence of their rivals, with Huawei stating in a press event that its way around this is by offering the highest-performance devices. The pair are also seen as makers of entrylevel smartphones the adoption of quad-core processors and other high-end technology is a definite effort to counter this perception. Just over 12 months on from announcing its partnership with Microsoft, Nokias latest device announcements show that not only is it putting a lot of effort into generating momentum for its Windows Phone range, but that it is also working to offer products using this platform at a range of price points. With its Symbian OS sales dropping off dramatically, it will need to ramp up Windows Phone volumes swiftly to counter this, and a broad product range is clearly an effective tool to this end. Four years in the making, the PureView is likely to be its last Symbian phone of any significance. For those further down the tree, life is not getting any easier. It is early days for Sonys guidance of the former Sony Ericsson, but the company will need to do something impressive sooner, rather than later, if it is to grow beyond the companys current position in the feature phone-replacement market. And while Motorola flew under the radar at the show, all eyes will be on its activities once it is fully ensconced into the Google fold.
2

HTC One

Huawei Asc end D

Nokia Lumia 610

Wireless Intelligence 2012

Devices: LTE smartphones high on the agenda

Wireless Intelligence: Mobile World Congress 2012 wrap-up
This years event saw most of the Asian handset manufacturers aggressively promoting LTE devices while the likes of Nokia, Motorola - and even Samsung were displaying very few LTE-enabled devices. LTE was the key theme of LGs stand with its large LTE device portfolio being demoed and a recurrent banner claiming that LTE, its always LG and that LG holds the largest [number of ] essential LTE patents. Similarly, both ZTE and Huawei were displaying a large number of LTE devices while Qualcomm and Ericsson were demoing Voice over LTE (VoLTE) calls with prototype smartphones. Key points Most LTE smartphones commercially available currently support Circuit Switch Fall Back (CSFB) VoLTE will be introduced to consumers in late 2012 and large scale deployments of VoLTE with Single Radio Voice Call Continuity (SRVCC) will start in 2013 China Mobile President, Li Yue, stressed his support for handset vendors developing converged devices to promote the wide scale uptake of TDD/FDD LTE During the Global TD-LTE Initiative (GTI) summit, Qualcomm and Hi Silicon announced multimode device chipsets supporting 2G, 3G and TDD/FDD LTE Samsung said that it has sold 1.7 million LTE devices in Q4 2011 and has a 41% market share of this segment, making it the LTE market leader globally Wireless Intelligence predicts that global LTE connections will grow from 10 million in 2011 to 500 million in 2016 Wireless Intelligence estimates that handsets will account for 20% of the global LTE devices market in 2013, 33% in 2014 and 50% in 2015
Samsung Galaxy S II

Viewpoint: First VoLTE devices signal long road ahead for LTE
VoLTE smartphones were absent at the Consumer Electronics Show last January and at Congress last week. Most LTE smartphones being displayed during Congress were supporting CSFB which relies on 2G/3G legacy networks for voice calls and data traffic outside of LTE coverage zones. Last month, Qualcomm and Ericsson announced that they have made the worlds first voice call handover between LTE and WCDMA networks. At Congress, the pair were demoing VoLTE calls via SRVCC with prototype smartphones and explaining that from a device and chipset pricing point of view, VoLTE does not add any incremental cost compared to LTE (CSFB) smartphones. Yet, commercial scale in VoLTE is not expected until 2014. The availability of LTE smartphones is limited by the lack of LTE spectrum harmonisation. Most vendors have to deploy LTE devices on a per geography and per operator basis. As an illustration, AT&T in the US has rolled out LTE on the 700 MHz band and its LTE handset portfolio includes the HTC Vivid, HTC Titan II, LGE Nitro HD, Nokia Lumia 900, Pantech Burst, Pantech Element, Samsung Galaxy SII Skyrocket, Samsung Galaxy Note, Samsung Exhilarate and Sonys Xperia ion. Most LTE smartphones showcased during the week were triband LTE devices supporting 800 MHz, 1800 MHz and 2600 MHz frequency bands such as the LG Optimus Vu and Optimus LTE, Samsung Galaxy S II LTE and Galaxy Tab 8.9 LTE. In contrast, Huaweis LTE smartphone portfolio Ascend P1 LTE and Ascend D LTE is quad-band, supporting 800 MHz, 1800 MHz, 2600 MHz and 2300 MHz bands. ZTE was the only vendor to display a multimode LTE/CDMA smartphone with its N910, which supports FDD LTE and EV-DO. TD-LTE devices were also absent from the congress showrooms as the Global TD-LTE Initiative (GTI) summit called for vendors to develop converged FDD/LDD LTE devices.

Huawei Ascend P1

Wireless Intelligence 2012

ZT

EN

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Devices: Ice Cream Sandwich ushers in a new era of iPad rivals

Wireless Intelligence: Mobile World Congress 2012 wrap-up
With the imminent launch of the new iPad, rival tablet vendors used Congress to take the wraps off a slew of new tablets that they hope will enable them to eat into Apples dominant market share. The vast majority will run Android 4.0 (Ice Cream Sandwich), the version of the Google platform designed to unite the smartphone and tablet form factors. The new devices on show came with a variety of screen sizes, peripherals and in some cases gimmicks. As in the smartphone space, the first tablets powered by quad-core processors were also unveiled, offering PC-like performance. Key points Samsung launched a 10.1-inch version of its Note tablet, a follow up to the first (5.3-inch) Note unveiled at last years event. The Android 4.0 powered tablet comes with Samsungs S-pen technology ASUS announced a number of new Transformer Pads as well as its PadFone hybrid, a 4.3-inch Android smartphone that can be plugged into the PadFone station to become a tablet, while a keyboard dock can be added to create a netbook Huawei launched the MediaPad10 FHD 10-inch tablet boasting a 1.5GHz quad-core processor. Available from Q2, this is the fourth tablet from the Chinese vendor ZTE launched four tablets: the PF100 and T98 both sport the Nvidia Tegra 3 1.5GHz quad-core chip and boast 10.1-inch and 7-inch screens, respectively. The low-end 10.1-inch V9S is an Android 3.2 tablet with a Qualcomm dual-core 1.2GHz processor, while the Android 4.0-based 10.1-inch V96 runs 1.7GHz Qualcomm dual core Toshiba launched the 10.1-inch Excite X10 LE, which it claims is the thinnest tablet in the market at just 0.3-inches (7.7 mm) thick Other highlights include a waterproof tablet from Fujitsu (Arrows) and the 5-inch Optimus Vu smartphone/tablet hybrid from LG

Viewpoint: Asian vendors raise the stakes with first quad-core tablets
The array of new Android-powered tablets on show represents fresh momentum behind Android as a tablet platform, moving on from the often disappointing early models. The 10.1-inch screen size is emerging as standard (slightly larger than the 9.7-inch iPad), while a 7-inch display is emerging as the dominant display for smartphone/ tablet hybrids. Samsung has blurred the distinction between its Note and Tab lines, launching a full size (10.1-inch) Note and previously announcing a 7-inch Galaxy Tab. In the absence of the anticipated Galaxy S III smartphone, the 10.1-inch Note was the South Korea vendors most significant product launch of the week. Like its new Ascend D smartphone, Huaweis MediaPad10 FHD runs the Chinese vendors own quad-core chipset, though rival quad-core devices (eg: ZTE) have opted for Nvidias Tegra 3. It remains to be seen how the Asian vendors will price their high-end devices but they are likely to be highly disruptive. No major updates to the Motorola XOOM were announced, due (presumably) to Googles on-going acquisition of Motorola Mobility. Research In Motion was similarly quiet on the tablets front, though the firm released new software (2.0) for its PlayBook device a week prior to the event, adding several much-needed new features, including native email.
Samsung Galaxy Note 10.1

Despite the product launches, there were few tablet-related apps, services or content announcements, an area that has underpinned the recent success of the Amazon Kindle Fire. Instead, Android vendors are looking at peripherals and docking options (eg: ASUS) as a possible differentiator in an increasingly crowded market.

Wireless Intelligence 2012

ASUS PadFone

Services: Connectivity the key to future transport and urbanisation

Wireless Intelligence: Mobile World Congress 2012 wrap-up
The unusual presence of motor companies during Congress was evidence of a rapidly changing mobile ecosystem. Bill Ford Jr started his Monday keynote by painting the risks that a global gridlock would have on our future if the motor and mobile industries do not collaborate. This gridlock phenomenon is exacerbated by growing population and urbanisation rates and Fords view was later echoed by Google and Ericsson in their respective keynotes. By mid-century, the urban transportation landscape will have radically changed and mobile networks have to rapidly adapt to a fast approaching M2M reality. Key points Global vehicle population: 1 billion cars today on the road worldwide, a number predicted to grow to 4 billion by 2050 Ford is launching its SYNC voice-activated in-car mobile connectivity system in Europe with its new B-MAX family car (Bluetooth, iPod and USB connection and emergency assistance) Ford detailed its Blueprint for mobility programme which communicates real-time data using mobile networks and tools such as 3D mapping, geolocalisation and web-based services to optimise transportation BMW ConnectedDrive service is available in nine countries and will be deployed in 38 countries by 2015 BMW is to include in-car services such as advanced internet browser, personal entertainment solutions, server-based hybrid offboard-navigation, e-navigation, features and message dictation Ericsson presented the Copenhagen Wheel, a connected bicycle developed by MIT Senseable City Lab which provides feedback on pollution, traffic congestion and road conditions in real-time
Networked Consumer Electronics Networked Verticals 2.0 Industries
Networked Everything Networked Society

Viewpoint: Motor and mobile firms speed up M2M collaboration

According to Bill Ford Jr, a global gridlock implies never ending road traffic congestion and increased pollution. In the decade to come, 75% of the world population is expected to live in large cities and 50 of these cities will have more than ten million people. With four billion cars expected on the road in 2050, Ford further stated that if we look at the numbers and at the state of our global transportation infrastructure, it is not difficult to see a future where the flow of commerce and even healthcare and food delivery are compromised. If that happens, I believe that global gridlock becomes a human rights issue. Hans Vestberg CEO of Ericsson mentioned similar urbanisation challenges, particularly those that would affect the development of heterogeneous networks. Having already surpassed the point where the majority of the population lives in urban areas, Ericsson further estimated that by 2016, 30% of the population will live on 1% of the surface of the Earth and generate 60% of all data traffic. Both Ford and Ericsson highlighted the large potential for M2M and an urgent need for network optimisation. Ford called for the need to optimise the transportation ecosystem through a single network that uses real-time data to link together public and personal transportation (pedestrian walkways, bicycles, buses, trains, planes, automobiles) to save time, conserve resources and lower CO2 emissions. Ford also acknowledged that motor companies have historically been slow at implementing in-car mobile innovation and that they are now ready to speed-up such processes to adapt to a fast-moving mobile industry. A week after the Congress, Vodafone and BMW announced that BMW ConnectedDrive cars in Germany will be fitted with Vodafone SIM cards to enhance safety, traffic avoidance and motoring efficiency. From 2015 onwards, all new cars will be fitted with latest mobile data connections and SIM cards that automatically call the emergency services in the event of an accident an innovation led by the European Union eCall initiative.
5

1st wave

2nd wave

3rd wave

Source: Ericsson Wireless Intelligence 2012

Services: Recalibrating the mobile apps ecosystem

Wireless Intelligence: Mobile World Congress 2012 wrap-up
While HTML5 has been a hot topic in the apps industry for some time, the technology came into the spotlight at Congress, thanks to high-profile support from Telefnica Digital and Facebook. An apps and content ecosystem powered by HTML5 will provide a more open alternative to those controlled by companies such as Apple, Google and Microsoft, with collaboration being the word of the day as the technology standards evolve. Key points Telefnica announced a partnership with Mozilla to create a handset platform built on web technologies, enabling the creation of lower-cost devices that still offer high performance Deutsche Telekoms Innovation Labs is also working with Mozilla, with dedicated development resources assigned to the project, and DT evaluating further steps based on the work Facebook pledged to work with the community, including vendors, operators and other partners, to drive the evolution of web technologies. Its focus is on standardisation and payment mechanisms

Viewpoint: HTML5 comes of age - nearly

Currently, the industry is dominated by app silos for smartphone platforms including iOS, Android and Windows Phone, giving significant power to the companies controlling these platforms Apple, Google and Microsoft, respectively. As much as HTML5 provides a tool for the creation of a standards-based apps and content ecosystem, perhaps more significantly it will provide a way to wrest back some control. With Apple, Google and Microsoft (to varying degrees) controlling the channel to customers, app approvals process, and monetisation options, it is easy to see why other participants in the ecosystem notably operators and developers may be seeking an alternative. Late last year, it was reported that Facebook was planning its own HTML5-based app platform, as a way to extend its existing app economy to mobile. At this point, it was noted that with Facebooks impressive reach in mobile 425 million mobile users and the deep engagement of its customers, the company could easily prove to be a disruptive force. In his keynote, Brett Taylor, CTO of Facebook, took an altogether more collaborative stance. By working through standards group W3C, and by partnering with device vendors and operators, the company is clearly looking to give the message that it comes in peace, with a full mobile internet, open to all, to the greater good. Telefonicas work with Mozilla takes this even further, to the point where the whole device platform is based on web technologies. Mozilla provides an interesting partner in this project: the companys web credentials are sound, but it has proved less of a threat than other internet players such as Google or Microsoft making it the ideal ally. While the embracing of standards is also a positive, it will be important for W3C to be able to keep pace with the fast-moving industries in which it is working device capabilities increase at an impressive pace, with app developers also innovating in order to differentiate.

Wireless Intelligence 2012

Services: NFC shows steady progress, but no big breakthrough

Wireless Intelligence: Mobile World Congress 2012 wrap-up
Mobile payments were once again a key theme at Congress but the headlines were made by on-going innovations in this area in the developed world (with plenty of announcements from the likes of Western Union) rather than in NFCbased payments. NFC has already established itself as the de facto standard for contactless mobile transactions but widespread adoption of services remains hamstrung by limited handset and merchant support. Operator momentum behind SIM-based NFC was typified by major announcements from Vodafone and the ISIS US JV but the operator-led approach now faces major competition from the likes of Google Wallet. Key points Vodafone and Visa announced what they claim is the worlds largest mobile payments partnership to develop a mobile wallet service that will launch initially in Germany, Netherlands, Spain, Turkey and the US. In developed markets, purchases will be able to be made using NFC-enabled smartphones equipped with Visa payWaves technology ISIS, the US operator m-payments JV, announced deals with card issuers Chase, Capital One and Barclaycard to enable the banks customers to load money into the ISIS mobile wallet via their credit, debit or prepaid cards Smartcard-maker Gemalto struck a deal with Sony to support the Japanese firms proprietary (but widely used in Japan) FeliCa contactless technology in its NFC-enabled SIMs. Under the agreement, Gemalto will incorporate FeliCa into its NFC SIM product line-up, beginning this year Google announced that it would launch the first non-Samsung handset carrying its NFC-based mobile wallet very soon. The LG Viper will be the third device to support the service after the Samsung Nexus S and Galaxy Nexus A study by Booz & Company (commissioned by the GSMA) showed the service value per wallet was US$114 in a fragmented market against US$128 in a collaborative LG Viper set-up
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Viewpoint: Vodafone rollout the highlight in a muted week for NFC

Vodafones announcement that it will rollout NFC-based payments in conjunction with Visa in five markets later this year is probably the most significant announcement to date in the NFC space by the UK-based operator giant, which until now had been quiet on this front (certainly compared to European rivals such as Orange). Successful early deployments could see the scheme extended across Vodafones vast global footprint, including in India. Vodafone has also hinted that it is looking to extend the platform, noting that it is inviting banks, retailers, transport and utility companies, event organisers, smartphone application developers and advertisers to host a broad range of services within its mobile wallet. In the US, the ISIS joint venture (AT&T, Verizon, T-Mobile) showed progress by signing up a host of major US card issuers having already signed up the major card marques (Visa, MasterCard, Amex and Discover), and is on track to launch in Utah and Texas this summer. Despite being beaten to launch by Google Wallet, ISIS can now claim to have a richer ecosystem in place; the Google service is supported by just one operator (Sprint), one issuer (Citi), and still has only two (soon to be three) supported devices. Elsewhere, the deal between Gemalto and Sony demonstrates further alignment between NFC and the FeliCa contactless standard that is entrenched in Japan but not used elsewhere. This deal follows on from the agreement forged late last year by Japanese operators NTT Docomo, KDDI, and SoftBank to support NFC as the international variant of FeliCa.
payWave

Wireless Intelligence 2012

Networks: Asian heavyweights aim for LTE scale

Wireless Intelligence: Mobile World Congress 2012 wrap-up
Aside from the LTE devices that were on show at Congress, a number of operators and vendors detailed their ambitious plans towards the next generation technology. China Mobile revealed its TD-LTE network roadmap which will see the deployment of 200,000 TD-LTE base stations by 2013, while Samsung announced its target to become a top three LTE network vendor by 2013. Key points China Mobile said that over 20,000 LTE base stations will be in operation by the end of this year, growing to 200,000 by 2013 China Mobile will launch LTE services in Hong Kong this year as an early example of converged FDD/TDD LTE service in the region Samsung announced its long-term target to become one of the top three global LTE infrastructure vendors by 2013 IP Hong, Samsungs VP of Marketing, mentioned that the company has eight commercial LTE contracts (all outside of Europe) and that it has deployed tens of thousands of base stations A recent Wireless Intelligence study shows that there are just over 50 live LTE networks across 30 countries at present (covering 5% of the world population), growing to over 200 networks in more than 70 countries in 2016
100%

Viewpoint: Diagnosing LTE spectrum

Spectrum has often been referred to as the lifeblood of the mobile industry and remains a key enabler for LTE networks and devices. As regulators in most developing markets are in the process of allocating spectrum for new LTE networks, there are still many issues facing operators and manufacturers. LTE spectrum fragmentation is caused by 38 deployed frequency band combinations. Such fragmentation has the potential to hinder global LTE roaming if device manufacturers are required to include support for many disparate frequencies in their devices. During a briefing from the Next Generation Mobile Network (NGMN) group at the Congress, Yuhong Huang, deputy general manager China Mobile research institute, said that development of devices that are able to support these [LTE] frequency bands and in addition multiple technologies is a prerequisite for global roaming, but it is a challenge to implement more than ten LTE bands in current products. The NGMN group mentioned that one of the main issues facing operators was to resolve global roaming by the use of multiband/multimode devices. The group launched its multiband/multimode project which involves the major chipset and device vendors so as to enable effective knowledge transfer. Furthermore, the ITU Secretary-General, Hamadoun Tour, spoke during the Congress to call on governments to find alternative solutions to allocate spectrum, stating that the traditional spectrum auction approach was far from ideal. Dr Tour called for governments to lessen the cost burden on mobile operators by reducing license fees and taxation, stating that such high costs stifle industry growth and have an adverse impact on economic performance. Meanwhile, an agreement has been reached during the recent World Radiocommunication Conference (WRC-12) to open the 700 MHz band to mobile broadband services.

2010
75%

2016

50%

25%

0%

GSM/EDGE

HSPA

LTE

Global coverage, % population

Source: Ericsson

Wireless Intelligence 2012

Networks: Network evolution aims to address data challenges

Wireless Intelligence: Mobile World Congress 2012 wrap-up
Ericsson CEO Hans Vestberg used his Wednesday evening keynote to outline his vision for the connected future (a networked society), highlighting not only the current demand on infrastructure but also the vastly untapped opportunity in both the developing world and for non-smartphone users. On next-generation networks, Vestberg highlighted that latency should be treated as importantly as capacity and speed, which would lead to new opportunities, such as real-time emergency alerts from connected cars. Throughout the week, the same message was heard from the handset and operating system vendors (notably Google), M2M players (notably Ford) and the GSMA itself. The message was one of sheer scale - we may have reached 6 billion connections today, but the growth certainly isnt slowing. Key points Reached 6.6 billion connections globally, 85% global coverage by population Of these, 1.3 billion connections are used via mobile broadband technologies Mobile broadband in particular has grown 60% year-on-year For every 10% increase in broadband penetration, Ericsson estimates a corresponding 1% increase in GDP Data growth a catalyst 16 for network investment, Cellular Offload 14 particularly in LTE 22% Global smartphone 12 penetration has 10 surpassed 10%, but 8 Ericsson see more opportunity in the 6 unserved 90%
Traffic from mobile devices (EB/month) 4 2 0

Viewpoint: Ericssons strategy remains unchanged, but producing dividends

In several areas - smartphones, mobile broadband and M2M - Vestberg highlighted that there was more of an opportunity among the unconnected than those using such technologies today. Vestbergs main message - change will never again be this slow - called attention to the infancy of the industry but also the tremendous rate at which each successive technology is adopted. Smartphone usage and M2M were presented as the key examples of the opportunity available to operators, a view mirrored (in separate sessions) by Googles Eric Schmidt and an operator panel including Bharti Airtel, Telefnica and VimpelCom, highlighting the smartphone opportunity. The challenge for infrastructure vendors, noted Vestberg, was that networks originally built for voice calls are now focussed on delivering data. Raw capacity isnt the only concern, but also density planning in urban areas where small cells or Wi-Fi offload make more sense. Ericsson stated that in some cases, up to 80% of traffic is even indoors. Last year, Ericsson expanded into content services in a big way by announcing a tie-up with Akamai to support the caching of content within operators networks, thus reducing the time required to deliver (particularly data-hungry) content to subscribers devices. Vestberg was joined on stage by the digital heads of Universal Music and Thomson Reuters to highlight progress in this area, and both reiterated that content providers need to work with the digital revolution, not against it - a mistake that has cost the music industry dearly over the last decade. However, as data-hungry devices and services proliferate, mobile operators at congress raised their concerns around the role of over-the-top (OTT) players in data network congestion and investments. Executives of Telefnica Latin America, VimpelCom and Bharti Airtel agreed that mobile content should pay its way. Sunil Mittal, Chairman and MD of Bharti Airtel, stated that if Google, Facebook and others are not going to pay for [network bandwidth], it will be transferred entirely onto customers. Mittal further added that if we have to build the highways, there has got to be a tax on highways. This debate led to a possibility for operators to impose interconnection charges on OTT players, lowering operator tariffs and funding spectrum and network investment.
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2011

2012

2013

2014

2015

2016

Mobile device traffic 201116

Source: Cisco Wireless Intelligence 2012

Networks: Operators in developing economies outline domestic challenges

Wireless Intelligence: Mobile World Congress 2012 wrap-up
Operators from developing economies were well represented at Congress, with separate sessions on strategy and innovation in these regions identifying some common themes. Not least among these was the opportunity for mobile to connect the five billion or so people on the planet who have never used the internet, and the challenge of producing the necessary devices at affordable prices for countries with low average national incomes. Mobile CEOs from Latin America, Russia, India and Africa also shared their opinions on regulation and taxation regimes, overthe-top (OTT) players and mobile money, as well as the most exciting and most challenging elements of operating in their home markets. Key points Lack of fixed infrastructure increases the importance of mobile internet access, e.g. in Brazil, 50% of access is via mobile compared to 17% in UK and 15% in US Smartphone penetration lower than global average e.g. less than 5% in India Large, growing young middle class population in some regions (e.g. 56% in Brazil in 2011, expected to rise to 60% in 2014) will intensify internet demand Governments need to understand scale of capacity required to meet potential mobile internet demand and provide supportive regulatory frameworks Operators must avoid example of developed markets by teaching consumers that access to the internet cannot be free, and have dialogue with OTT players The key price point required to drive mass smartphone adoption was variously identified as US$150 in China, US$100 in Latin America and US$50 in India

Viewpoint: Affordable handsets will drive the explosion in mobile internet

The smartphone revolution will be universal, asserted Google CEO Eric Schmidt in his Tuesday evening keynote, a vision that was endorsed by the various mobile and internet provider CEOs representing emerging markets during Congress. However, these companies were also equivocal in their view that this will only be achieved if manufacturers are able to produce smartphones at prices that are suited to the developing world. Operators and content providers from the BRIC nations described at Wednesdays Regional Focus panel how the scarcity of fixed internet in their regions had led to an immense opportunity for mobile internet growth, but in almost all cases the availability of handsets was the biggest single factor restricting demand. That these countries typically have smartphone penetration below the global average around 10% in Russia and China and considerably lower in India and Africa is a clear indication that their inhabitants are unable to afford an average US$500 smartphone. Indeed Sunil Mittal, chairman and MD of Bharti in India, said that a smartphone priced as low as US$50 would be required to move forward to the next business model and the mobile broadband networks would follow. To some extent we are already seeing the smartphone market divide into premium and low-cost segments, but from where can we expect a US$50 smartphone to emerge? Perhaps the obvious answer is China, where there are now over 600 different handset models and yet component suppliers continue to enter the market and drive prices down. Subsequently white-label Chinese manufacturers are able to produce cheaper and cheaper devices, sacrificing margins for volume, and leveraging operators brands where they do not have an established brand of their own. However, Schmidt wasnt found wanting when it came to identifying how he thought the challenge would be met, describing how Google was currently working with partners on smartphones in the US$100 to $150 range - with an eventual goal of a US$70 device that would be achievable within the next couple of years. Schmidt further stated that in 12 years, handsets are going to be 20 times faster, which means phones that cost US$400 now will be available for US$20.
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Santiago Fernndez Valbuena (Telefnica), Jo Lunder (VimpelCom) and Sunil Mittal (Bharti Airtel)
Wireless Intelligence 2012

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Whilst every care is taken to ensure the accuracy of the information contained in this material, the facts, estimates and opinions stated are based on information and sources which, while we believe them to be reliable, are not guaranteed. In particular, it should not be relied upon as the sole source of reference in relation to the subject matter. No liability can be accepted by Wireless Intelligence, its directors or employees for any loss occasioned to any person or entity acting or failing to act as a result of anything contained in or omitted from the content of this material, or our conclusions as stated. The findings are Wireless Intelligences current opinions; they are subject to change without notice. The views expressed may not be the same as those of the GSM Association. Wireless Intelligence has no obligation to update or amend the research or to let anyone know if our opinions change materially. Wireless Intelligence 2012. Unauthorised reproduction prohibited. Please contact us at info@wirelessintelligence.com or visit www.wirelessintelligence.com. Wireless Intelligence does not reflect the views of the GSM Association, its subsidiaries or its members. Wireless Intelligence does not endorse companies or their products. Wireless Intelligence operates under an Independence Charter. For full details please see www.wirelessintelligence.com/independence.aspx. GSM Media LLC, 1000 Abernathy Road, Suite 450, Atlanta, GA 30328.

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