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Introducing .. |
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Global Wireless
Data Market Update - 1H 2009
Download:
PPT |
PDF
Executive Summary
The Global Wireless Markets continued to grow rapidly especially in
India and China where the carriers (together) are adding around 20M
new subscriptions every month. China crossed the 700M subscriptions
mark in July while India's total went past 450 in Aug. Overall, the
global subscriptions penetration is above 64%. During 2009, services
revenues further tilted towards data services, increasing 21% from
2008 EOY.
The overall global mobile revenues (including equipment) for the
year are expected to stay flat as the impact of recession was felt
in many geographies in the first half of 2009. While countries like
US, Japan, China, and India showed very little signs of pullback,
most of Europe (except France) and the developing world are expected
to experience a decline in overall service revenues in 2009. For the
first time, mobile data contributes approximately quarter or 25% of
the total global service revenues. Additionally, except for India,
all major markets have their data contribution percentages above
10%.
For some leading operators, data is now contributing over 40% of the
overall revenues. However increase in data ARPU is not completely
offsetting the drop in voice ARPU for most operators. From the true
and tested SMS messaging to the new services such as Mobile
Advertising, Social Networking, Commerce, Mobile Wallet, and others,
different services helped in adding billions to the revenues
generated in 2009. US continues to lead Japan and China in total
mobile data revenues by a healthy margin.
NTT DoCoMo continues to dominate the carrier ranking in terms of
mobile data service revenues, however, Verizon Wireless which became
#2 replacing China Mobile is slowly edging towards the #1 spot and
is likely to overtake DoCoMo within the next few quarters.
The velocity with which the smartphones are being introduced into
the market, one wonders if in five years, we will be using the
moniker to describe devices and if the "dumbness" in the device
market will be practically eliminated. Led by Apple's Appstore
success, significant investments are pouring into the appstore
world. In parallel, the debate over apps vs. mobile web is
intensifying. The implications of the transition will be significant
on the ecosystem on many levels.
Though 4G as a standard hasn't been defined yet, the discussions
around LTE (and to some extent WiMAX) grew intense and started
climbing the slippery slope of the hype curve. Many prominent
operators have come out in support of LTE with Verizon being the
most aggressive in launching their next generation network in 2010.
Chetan Sharma Consulting conducted its semiannual study on the
global mobile data industry. We studied wireless data trends in over
40 major countries - from developed and mature markets such as
Japan, Korea, UK, and Italy to hyper growth markets such as China
and India.
This note summarizes the findings from the research with added
insights from our work in various global markets.
Impact of Global Recession
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Telecom in general fared better than other industries. In some
regions, it hardly caused a tremor. However, in most nations, the
impact was acutely felt by the operators. Amongst the operators we
studied, only 3, SK Telecom, O2 UK, Telefonica, T-Mobile Germany and
Austria, Vodafone Germany and Italy, KTF experienced increase in
both the data ARPU and overall ARPU during 1H09 (and some of
increase was due to the fluctuation in international currencies).
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Looking at the data at a country level, almost all nations noted a
decline in overall ARPU and majority in data ARPU. However, almost
everywhere data for 1H09 improved over 2H08 indicating that the
recession had a worse impact on the wireless sector last year
compared to this year and in general the conditions in the telecom
microcosm are improving globally.
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Rule of Three
is kicking in most markets with smaller players having to consider
the M&A option to remain viable. T-Mobile/Orange, Bharti/MTN tie-ups
are just the start of that process.
Service
Revenues
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US extended its lead over Japan as the most valuable mobile data
market in service revenue with US adding $20.6B vs. $16B for
Japan in 1H 2009. China with $8.6B was ranked number 3. US
registered the highest growth amongst the top 3 with over 39%
increase from EOY 2008 levels followed by Japan and China at 5%.
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The top 10 nations by service revenues are: US, China, Japan,
France, Italy, UK, Germany, India, Spain, and Brazil.
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The top 10 nations by data service revenues are: US, Japan,
China, UK, Italy, Germany, France, Korea, Spain, and Australia.
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NTT DoCoMo continues to dominate the wireless data revenues
rankings with almost $8B in data services revenue in 1H09.
Almost 45% of its overall revenue now comes from data services.
DoCoMo also crossed the 50M or 90% 3G mark in June.
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NTT DoCoMo was followed by Verizon Wireless, China Mobile, AT&T,
KDDI, Sprint Nextel, Softbank Mobile, T-Mobile USA, O2 UK, and
China Unicom to round up the top 10 operators by wireless data
service revenues.
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The top 10 global operator groups now account for over 63% of
the global mobile data revenues.
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Each of the top 5 carriers are expected to exceed $10B in yearly
mobile data service revenues in 2009
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Data revenues for the top 10 operators increased 10% from 2H
2008 and now account for almost 48% of the global mobile data
revenues though their subscriber share is around 30%.
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The biggest jump in data revenues was experienced by Verizon,
AT&T and Softbank. DoCoMo suffered a 2% decline compared to
2H08.
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Most of the operators in developed nations are contemplating
future strategies to boost data revenues such that the decline
in voice revenues is at least compensated for. There are very
few operators who have experienced increase in overall ARPU.
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China reported approximately $8.5B in data revenues for 1H09 and
the percentage contribution from data services is around 28%,
data ARPU is around $2.7. For India, data ARPU continues to stay
around $0.50 as most of the new adds are voice only subscribers
and there is continued price pressure in the market.
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China Mobile remains the most valuable telecom operator with
over $200B in market cap. It is followed by Vodafone at around
$122B. Telecom groups in mature markets are under enormous
pressure to either come up with a global expansion strategy or
accelerate their existing plans.
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In 2009, SMS’s vice like grip on data revenues continues to
loosen a bit with many carriers seeing an increase in non-SMS
data revenues. On an average, Japan and Korea have over 70-75%
of their revenue coming from non-SMS data applications, US
around 50-60%, and Western Europe around 20-40%.
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NTT DoCoMo has been at the cutting edge of the mobile data
evolution by creating new markets. They are exploring new
technologies and social experiments ahead of almost anybody else
in the market. Our long history with the Japanese and Korean
markets has taught us that while the individual strategies in
each market will differ, one should study the trends,
technologies, and ecosystem dynamics in these markets to get a
sense of what’s coming.
ARPU
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Most of the major operators around the world have double digit
percentage contribution to their overall ARPU from data
services. Operators like DoCoMo, and Softbank are over 44%. KDDI,
3 Australia, 3 Italy, 3 UK, Vodafone UK, O2 UK, KTF, Telstra,
and 3 Sweden exceeded 30% and many others are on the verge of
crossing the 30% mark.
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3 Australia reported the highest increase in data ARPU from 2008
with 31% growth. Other notable percentage increases in ARPU were
from 3 Italy, SK Telecom, KTF, T-Mobile Germany, 3 Sweden, and
T-Mobile Austria. The Japanese operators saw a decline in ARPU
by 3%. In terms of absolute dollar amount, NTT DoCoMo leads the
pack with $25 data ARPU.
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The biggest percentage contribution by data ARPU has been
consistently registered (since mid 2002) by two Philippines
carriers – Smart Communications and Globe Telecom with over 56%
(or $3) contribution coming from the data services. Philippines
is also the most active messaging nations where users average a
message/hr round the clock though US txters have had the most
acceleration in use.
Mobile Data Traffic
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We have been calling attention to the tremendous increase in
mobile data traffic for some time. The discussion has hit
mainstream and many operators are scrambling to nail-down their
short-term and long-term strategies to manage the data traffic
growth in their networks. See our paper on the subject "Managing
growth and profits in the yottabyte era."
The recommendations discussed in the paper are slowly been
adopted by various vendors and operators worldwide.
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The global mobile data traffic is expected to exceed an Exabyte
for the first time in 2009. In fact, the data usage is growing
so fast that next year, the two territories experiencing the
most growth - North America and Western Europe are going to
exceed an Exabyte in mobile data traffic.
-
2010 will also mark the first year when the total number of
mobile broadband connections will exceed the total number of
fixed broadband connections.
Subscriptions
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The global mobile market continues to grow at an explosive pace
and is expected to go past 4.5B subscriptions in 2009 and is
likely cross the 5B mark in 2010. The global mobile
subscriptions now represent over 64% of human population on
Earth.
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China and India continued their red-hot growth in 1H09.
Combined, they added 132M new subscriptions with India easily
surpassing China in each of the last 12 months in terms of
net-adds.
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China crossed the 700M subscription mark in July while India's
total went past 450 in Aug. In total, China is still years
ahead. In the meantime, US crossed the 90% subscriptions mark
earlier this year.
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In the last 10 years, the growth patterns in the mobile industry
have completely reversed. In 1998, the developed world accounted
for 76% of the subscriber base, in 2008; the percentages have
flipped with developing world now accounting for 76% of the
subscriber base and are likely to increase to 85% by 2018.
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The top 10 nations by subscriptions are: China, India, US,
Russia, Brazil, Indonesia, Japan, Germany, Pakistan and Italy.
-
China Mobile became the first operator (and likely to be the
only one for a very long time) to cross the 500M mark. It
remains the #1 carrier in terms of the total number of
subscriptions followed by Vodafone at 264M. Telefonica, América
Móvil, Telenor, T-Mobile, China Unicom, TeliaSonera, Orange, and
Bharti Airtel round up the top 10 largest telecom groups in the
world.
Others
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Messaging still accounts for the lion-share of data service
revenues. However, other services such as Mobile Music, Mobile
TV and video streaming, Voice navigation, PNDs, Mobile Games,
IMS, LBS, Mobile advertising, and others have gradually chipped
away the share from messaging. Alternate devices with wholesale
cellular agreements are also flooding the market. In Japan,
Mobile Commerce is expected to do much better than Mobile
Advertising. Though not much talked about, enterprise
applications are also being adopted widely esp. in North America
as more workers become mobile and corporations seek efficiencies
in their operations and supply-chain.
-
After falling below the 100M/quarter in Q1, Nokia rebounded to
sell 103M units in Q2 09. Samsung also exceeded 50M with a
strong second finish at 52M. LG finished a strong third with
almost 30M in its bag and Motorola showed signs of strength by
selling close to 15M units.
-
The second quarter was dominated by two blockbuster launches of
iPhone 3GS and Palm Pre. While iPhone continued to attract new
customers, Pre suffered from a less than adequate launch
strategy. By lowering the 3G device price to $99, Apple set the
new bar in smartphone pricing leaving the rivals scrambling for
response. The release of a slew of Android handsets sets up the
stage for fierce competition during the holiday season and into
2010.
-
China and India represent the biggest opportunities for the
Infrastructure providers. China launched 3G across the three
operators earlier this year. India is also going through its 3G
spectrum policy and is likely to resolve some of the contentious
issues shortly. Some of the biggest infrastructure contracts are
coming from these two countries as they look to expand coverage
into rural areas.
-
Deployment of 3.5G technologies is in full swing. However, it is
the discussion of 4G that is occupying the headlines, even
though 4G hasn't been fully defined yet and the current
candidates for 4G are nowhere near the performance goals of 4G
(150Mbps/50+Mbps). Many larger operators have laid out their
plans for deploying LTE starting next year.
As usual, we will be keeping a close eye on the trends in the
wireless data sector in our blog, twitter
feeds, future
research reports,
and articles.
The next US Wireless Data Market update will be released in Nov
2009. The next Global Wireless Data Market update will be issued in
March 2010.
Your feedback is always welcome.
Thanks.
Chetan Sharma
Disclaimer: Some of the companies mentioned in this note are our clients.
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Missed
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Upcoming
Events |
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Notes from
recent events |
PARC,
CTIA,
NAB,
TiE,
Mobilebeat,
GigaOM |
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Sept 22 |
Mobile Breakfast
Series, INAUGURAL EVENT, State of the
Union: Where do we go from here, Seattle |
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Sept 24 |
3G
Americas Analyst Meet,
Dallas |
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Oct 6 |
CTIA,
Mobile Web, San Diego |
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Oct 8 |
CTIA,
Mobile Appstores, San Diego |
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Oct 15 |
FiREGlobal
West Coast, Seattle |
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Oct 19-22 |
PAN IIT,
Chicago |
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Oct 20 |
ISACA, Bellevue |
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Nov 4-5 |
Open Mobile
Summit, San Francisco |
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Nov 16 |
Mobile Northwest, Seattle |
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Dec 4 |
Mobile
Breakfast Series, The Impact and
Evolution of Mobile Broadband (w/ Om Malik, Scott
Richardson, Ken Denman) Seattle.
Register |
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In addition, Chetan will be doing some
private briefings to carriers, content providers and enterprise
solution providers |
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Upcoming
Research |
|
Nov |
US Wireless Data Market
Update Q3 2009 |
|
Jan |
2009 Year End Report and
Predictions for 2010 |
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March |
Global Wireless Data Market
Update 2009 |
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Missed an update?
All research notes can be found here. |
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© Chetan Sharma Consulting
2001-2009. All
Rights Reserved. |
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Chetan Sharma Consulting is a
consulting and advisory firm helping companies in the mobile and
voice communications sector. Our expertise is in developing
innovation-driven product, business, and IP strategy. We've
helped companies like NTT DoCoMo, China Mobile, Samsung, KDDI,
Motorola, Alcatel-Lucent, Sony, Virgin
Mobile, KTF, Sprint Nextel, Reuters,
Disney, Qualcomm, Motricity, Reliance, BEA, HP, Merrill Lynch,
Cincinnati Bell, Bain, SAP, Vulcan, American Express, and many
others. What can we do for you?
www.chetansharma.com |
If you have questions or
suggestions or feedback on this subject or on the wireless & mobile industry at large,
please contact us at
feedback@chetansharma.com - we look forward to hearing from
you.
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