Editor’s Note: RCR Wireless News has teamed up with Yankee Group to conduct a series of market surveys of RCR Wireless News’ subscribers to gauge their thoughts on various technology issues impacting the wireless ecosystem. Starting today and over the balance of the year, RCR Wireless News will publish the exclusive results from our joint project, with Yankee Group’s expert analysis, both in print issue and online.
More than 2,200 subscribers responded to our first wave of the study. Those of you who respond to the surveys will get an executive summary of the survey results and are eligible to win an American Express gift certificate. We congratulate today’s winner, chosen randomly from the “Alternative Devices” survey respondent pool: Thomas Tham of T-Mobile.
The second set of surveys is scheduled to launch in early June and many of you will be contacted by e-mail. We encourage your participation to ensure the continued high quality of survey results and to make the data as meaningful to you and your peers.
The Amazon Kindle may not have passed muster with Walt Mossberg, and it may be sold out never to return, but it’s a disruptive legacy. It’s a metaphor for the manner in which companies with cloud/transaction-based business models and operators can create innovative service distribution models in a targeted, unobtrusive way using the best of both parties’ assets. Very few traditional handset vendors are positioned to do the same, and Steve Jobs knows it. So where is the next Kindle?
Yankee recently received responses from a joint survey fielded through RCR Wireless News. One of the areas targeted was the market opportunity for alternative mobile devices in the U.S. Within the constraints of 10 questions, we sought input on a number of issues ranging from device categories, distribution channels, likely market participants, and business model evolution. Consider this an industry gut-check as operators begin experimentation in earnest with alternative access models and virtually everyone tries to out-“open” the other guy.
Just over 300 of you participated, so thanks. It also seems that most of you have your wits about you and have not succumbed to omnipresent sources of hyperbole, so congratulations. Here’s an early summary of what you had to say, plus some commentary on what your collectively informed opinions imply about the direction of this market. Have fun with it.
The 20% by 2011 test
You’re bullish on connected things that aren’t cellphones or laptops. About 64% of you think that more than 20% of devices connecting to cellular networks in 2011 will not be phones or laptops. And 74% of you think these devices will drive more than 20% of data traffic, and 55% believe this traffic will account for more than 20% of service revenue.
This implies a robust market for data centric (or VoIP) devices that over-index in terms of traffic, but contribute somewhat more modestly to the overall revenue opportunity.
What devices and channels?
We asked what device categories had the best prospects for high-volume sales in the next three years.
It’s interesting to see the enthusiasm for UMPCs and Internet tablets. This category has failed to find a mass market thus far, but is a loosely defined flagship for WiMAX and portable broadband use cases. We see from the results that you don’t all work for Intel, so the messaging must be working. Perhaps the Kindle folks should take a cue.
Also surprising was the consensus around cellular connected banking or payment devices. This of course implies significant alignment between multiple entrenched points of interest, not to mention massive investment in point-of-sale infrastructure upgrades between now and 2011. This is difficult to envision in the current environment where limited-pilots predominate.
We asked how well-suited various channels were to distribute the next generation of non traditional devices.
There is considerable faith in online and big-box retail channels. This is somewhat surprising considering the 5% to 8% contribution from the online channel today. It’s also interesting considering the complexities of various use cases, service activation, identity management, and basic in-store or out-of-the box training will be addressed. It seems you are optimistic about usability challenges being addressed and the inherently “high-touch” in-store experience favoring diversified big-box electronics stores over those of the operators. It is likely, of course, that an open-network future will see a variety of form factors active on carriers’ networks but never touching the carrier-direct retail channel.
The latter point stands to reason if the weight of consumer-facing internet, content, media, and entertainment companies will, as expected, continue to be the greatest change agents.
If GPhone then MicroPhone?
So which among these will make good on their threat of disruption by getting into the hardware game? Apparently Google and Microsoft.
Given the way Google has successfully stayed away from the CRM business, it’s difficult to see them getting into the hardware game directly. Microsoft has the precedent, and given the control points RIM, Apple, and Nokia have at their disposal, can the 3G Zune be so far off? It certainly begs an interesting debate about what control points – hardware, software, portal, distribution, content, etc. will confer the greatest competitive advantage among these colliding domains.
And which among the operators will embrace, host, and drive this evolution and carry the market into the new age of enlightenment?
The votes are mixed and a bit muted. Verizon Wireless gets publicity points for the any-apps, any-device initiative. I think this implies semi-enthusiastic competition-driven acquiescence among the Tier Ones to open access models, and reflects some inevitability and the hard work that will need to happen between now and. inevitable time.
I threw Google in there as a red herring. Perhaps this proved too great a distraction.
So if the smart readers of RCR Wireless News are right.
There are reasons to be optimistic about alternative connected device category growth. Their roots are in the continuing market disruption generated by the internet, content, and media domains as well as online and big-box retail distribution outlets.
Overall feedback was optimistic but also, and perhaps ultimately pragmatic. I reckon it’s a reflection of tangible, ongoing innovation, investment, and market restructuring in the face of an otherwise dubious economic climate.
An unconvincing 56% of you think revenue share models a la Apple will be mainstream in 2011. For expectations around the market character via open-access networks on alternate connected device category growth in the next three years, only 34% of you think the market will see a stage of hyper advancement that would make Korea blush. A total of 45% are betting on business as usual – that the free whiz-bang phone with the 2-year contract will trump innovation on the back of open access. And 21% see it as a boon for advertisers and a curse for consumer privacy.
Yankee clients can look for additional reports and analyses around this survey series, including this one. I hope you enjoyed it. Please feel free to contact me to discuss at http://www.yankeegroup.com/listAnalysts.do?authorId=1CCDBEC8F36E49E5.
Oh, and by the way, aren’t you impressed that I chose to lead with a Kindle and not an Apple reference? I know am.
