Assuming Square gets a 2.75% cut of all of the $11 million in payments processed per day, that’s around $300,000 in gross revenue per day, or a $110 million annual revenue run rate.
Friday, June 29, 2012
Square Processes $11 Million Worth of Transactions a Day
Square processes at a rate of $5 million a day (up from $3 million in 2011, and $4 million in March 2012), Sybase says. Others say Square processes $11 million a each day.
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LTE Will Reach 1 Billion Users by 2017
So says 4G Americas.
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Mobile Payments Will Reach $245 Billion by 2014
According to 2011 data from Ernst & Young, mobile payments are expected to reach $245 billion in transaction value by by 2014. The actual forecast transaction is probably not so important.
Neither is the forecast number of mobile money users are expected to total 340 million, equivalent to about five percent of global mobile subscribers.
Perhaps the more-important issue are the categories of mobile money Ernst & Young believe offer revenue potential for mobile service providers globally.
Neither is the forecast number of mobile money users are expected to total 340 million, equivalent to about five percent of global mobile subscribers.
Perhaps the more-important issue are the categories of mobile money Ernst & Young believe offer revenue potential for mobile service providers globally.
Mobile payment technologies and scenarios1
SMS | NFC | Mobile internet | |
Payment type | Person-to-person Person-to-business Business-to-person | Person-to-business Business-to-business | Person-to-person Person-to-business |
Use case | Domestic remittance International remittance Branchless banking | Contactless payments Identification- and marketingrelated services | In-app payments Mobile wallet transactions |
Characteristics | Payment services for the unbanked and underbanked | High levels of cross-industry collaboration | Extension of online payment services |
Examples | Salary payments (Roshan, Afghanistan) Money transfer (M-PESA, Kenya; Obopay) | Transit payments (Mobile FeliCa, Japan) | Mobile wallet (Paypal, Zong, Starbucks) |
Payment providers and enablers | Start-ups Mobile operators Money transfer companies Handset manufacturers | Card issuers Mobile operators Handset manufacturers Merchants Start-ups | Web services players Start-ups Mobile operators Merchants |
Mobile operator participation | High | Medium | Low |
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Voice over LTE Gains Momentum, From Low Base
"South Korea and Hong Kong have already successfully launched LTE data roaming and by August, SK Telecom expects to have the Samsung Galaxy S3, the first handset to support VoLTE on their network," he says.
Keep in mind that the growth is from a small end user base. By 2016 VoLTE will make up only about 14 percent of global mobile VoIP revenue, while over-the-top mobile VoIP continues to make up the lion's share by far,” he says.
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Smart Phone OwnersUse Devices 2 Hours a Day, Talk only 12 Minutes, O2 Finds
On average, O2 smart phone owners now spend over two hours a day using their devices, but talk only 12 minutes, and text only 10 minutes.
Smartphone users spend more time browsing the internet (25 minutes a day), social networking (17 minutes a day), playing games (13 minutes a day) and listening to music (16 minutes a day) than they do making calls (12 minutes), O2 says.
That illustrates the multi-function nature of smart phones, as well as the key role smart phones now play in a full range of "Internet access" activities.
Checking or writing emails represents 11 minutes of activity a day. Watching video consumes 9.4 minutes a day, while reading books represents about 9.3 minutes a day.
People spend about 3.4 minutes a day tacking pictures, as well.
Smartphone users spend more time browsing the internet (25 minutes a day), social networking (17 minutes a day), playing games (13 minutes a day) and listening to music (16 minutes a day) than they do making calls (12 minutes), O2 says.
That illustrates the multi-function nature of smart phones, as well as the key role smart phones now play in a full range of "Internet access" activities.
Checking or writing emails represents 11 minutes of activity a day. Watching video consumes 9.4 minutes a day, while reading books represents about 9.3 minutes a day.
People spend about 3.4 minutes a day tacking pictures, as well.
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What Must Apple Do to Revolutionize the "TV"
Apple’s rumored interest in producing television sets might prove a bigger challenge than its efforts with other consumer devices. It isn’t so clear what about TVs actually is “broken” enough for Apple to revolutionize the category as it has transformed the “mobile phone.”
Based on that past experience, some significant breakthrough in ease of use, features and content would be necessary. The touch interface arguably was key, but most of us also would say it was the App Store, and apps (content) that really made the difference.
In the case of a TV, that presumably would mean Apple has to change the “content” part of the value proposition in some significant way, beyond integrating existing Web content, which has been the key feature of Apple TV so far, in its ancillary device implementation.
It seems unlikely that navigation and Web content integration alone will transform the experience. What would be revolutionary is some new way for consumers to buy and watch programs they want, including a relatively full range of TV shows normally shown on subscription video networks.
But that is not a technology problem, that is a licensing problem. And, so far, the networks have seemed unwilling to cooperate.
Perhaps Apple really can revolutionize the TV set. But it won’t be easy.
Based on that past experience, some significant breakthrough in ease of use, features and content would be necessary. The touch interface arguably was key, but most of us also would say it was the App Store, and apps (content) that really made the difference.
In the case of a TV, that presumably would mean Apple has to change the “content” part of the value proposition in some significant way, beyond integrating existing Web content, which has been the key feature of Apple TV so far, in its ancillary device implementation.
It seems unlikely that navigation and Web content integration alone will transform the experience. What would be revolutionary is some new way for consumers to buy and watch programs they want, including a relatively full range of TV shows normally shown on subscription video networks.
But that is not a technology problem, that is a licensing problem. And, so far, the networks have seemed unwilling to cooperate.
Perhaps Apple really can revolutionize the TV set. But it won’t be easy.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Mobile Signaling Growing 30% to 50% Faster than End User Traffic
While data traffic is growing, signaling traffic is outpacing actual mobile data traffic by 30 to 50 percent, if not higher, 4G Americas says. As another example, a web-based IM user may send a message but then wait a couple of seconds between messages. To preserve battery life, the smartphone moves into idle mode. When the user pushes another message seconds later, the device has to set up a signaling path again, 4G Americas notes in a new white paper.
For real-time Internet applications, the logical always-on connection between the
server and client is required, resulting in frequent or periodic small heartbeat packets to be sent as a keep-alive message to maintain the connection.
“Push” services and “always on” apps add more load. All of that is in addition to the “bearer” traffic. Heavy users of apps illustrate what could happen to network demand as “early adopter” or “heavy user” behaviors become more mainstream. Today, heavy video or audio streamers consume about 2 Gbytes a day worth of video, or 1 Gbyte each day for audio streaming.
In other words, optimizing a mobile network for bearer traffic is one issue, while optimizing for signaling traffic is a different problem.
General computing these days revolves around content consumption and sharing, and heavy users of social networks can consume 7.5 Gbytes a month up to about 14 Gbytes a month. Cloud storage, for early adopters, now ranges from less than a gigabyte a month, up to about 5.5 Gbytes a month.
Leading users of gaming can consume gigabytes a day. The upshot is that total U.S. data traffic could grow 47 times over the next five years, unless wi-fi offload is available. If Wi-Fi offload is available, demand grows by “only” 24 times over the next five years.
The point, 4G Americas suggests, is that improvements to network, device platform, and application design can all help alleviate capacity issues, but there can be no lasting success without understanding end user behavior.
There is no question that end users are using more and more data every year. In 2011, 44 percent of mobile subscribers owned smartphones, which is more than double the market penetration of two years.
According to Nielsen, more than 50 percent of U.S. mobile phone users now use smart phones, in the first quarter of 2012.
Between 2010 and 2011, the numbers of smartphone subscribers engaged in various rich media
activities other than mobile video have all grown by 45 percent or more. Numbers of subscribers
performing game downloads and playing online games both increased more than 80 percent each in the same year, Nielsen also has reported.
For real-time Internet applications, the logical always-on connection between the
server and client is required, resulting in frequent or periodic small heartbeat packets to be sent as a keep-alive message to maintain the connection.
“Push” services and “always on” apps add more load. All of that is in addition to the “bearer” traffic. Heavy users of apps illustrate what could happen to network demand as “early adopter” or “heavy user” behaviors become more mainstream. Today, heavy video or audio streamers consume about 2 Gbytes a day worth of video, or 1 Gbyte each day for audio streaming.
In other words, optimizing a mobile network for bearer traffic is one issue, while optimizing for signaling traffic is a different problem.
General computing these days revolves around content consumption and sharing, and heavy users of social networks can consume 7.5 Gbytes a month up to about 14 Gbytes a month. Cloud storage, for early adopters, now ranges from less than a gigabyte a month, up to about 5.5 Gbytes a month.
Leading users of gaming can consume gigabytes a day. The upshot is that total U.S. data traffic could grow 47 times over the next five years, unless wi-fi offload is available. If Wi-Fi offload is available, demand grows by “only” 24 times over the next five years.
The point, 4G Americas suggests, is that improvements to network, device platform, and application design can all help alleviate capacity issues, but there can be no lasting success without understanding end user behavior.
There is no question that end users are using more and more data every year. In 2011, 44 percent of mobile subscribers owned smartphones, which is more than double the market penetration of two years.
According to Nielsen, more than 50 percent of U.S. mobile phone users now use smart phones, in the first quarter of 2012.
Between 2010 and 2011, the numbers of smartphone subscribers engaged in various rich media
activities other than mobile video have all grown by 45 percent or more. Numbers of subscribers
performing game downloads and playing online games both increased more than 80 percent each in the same year, Nielsen also has reported.
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It's Tough to be "10 Times Better" Than Everybody Else
One rule of thumb used by venture capital investors when assessing technology firms is to look for an order of magnitude better capabilities, when making decisions about whether to invest in a new start-up.
The reasons are many, but the assumption always is that, while a funded start-up is gearing up for its market challenge, market leaders will respond by closing the performance gap. By the time a challenger is ready to challenge the market leaders, the potential advantage will have been reduced.
Some might argue that technology performance is not the right way to measure order of magnitude advantages, though. What matters, some argue, is not technology performance but end user experience. At least in part, that is because most users don't buy "performance" so much as "experience."
That is particularly true for software products where the "experience" is the value, not the performance, as such.
A mobile payment capability, for example, has to offer an experience that is qualitatively and significantly better than paying with cash or a credit card. It can’t be a little better. It has to be a lot better. And that means it cannot be new experience that is just seconds faster.
Slight little improvements won’t motivate change, because the current process isn't really "broken."
You might argue that Square, and other merchant point of sale services offered by Intuit and PayPal have gotten such big traction because they were those sorts of “vastly better” experiences, allowing small retailers to take credit card and debit card payments where they never could do so before, on significantly better terms.
Small merchants might also value the faster time to see funds deposited into accounts, plus increased sales volume, without significant capital investment. All of that makes the payment experience better for a merchant. Technology advantages are of relatively small value.
The point is that it is harder than it seems to offer a new product that is really 10 times better than what exists. When that happens, though, as with payment systems that turn a tablet or smart phone into a merchant point of sale terminal adoption can be rapid.
The reasons are many, but the assumption always is that, while a funded start-up is gearing up for its market challenge, market leaders will respond by closing the performance gap. By the time a challenger is ready to challenge the market leaders, the potential advantage will have been reduced.
Some might argue that technology performance is not the right way to measure order of magnitude advantages, though. What matters, some argue, is not technology performance but end user experience. At least in part, that is because most users don't buy "performance" so much as "experience."
That is particularly true for software products where the "experience" is the value, not the performance, as such.
A mobile payment capability, for example, has to offer an experience that is qualitatively and significantly better than paying with cash or a credit card. It can’t be a little better. It has to be a lot better. And that means it cannot be new experience that is just seconds faster.
Slight little improvements won’t motivate change, because the current process isn't really "broken."
You might argue that Square, and other merchant point of sale services offered by Intuit and PayPal have gotten such big traction because they were those sorts of “vastly better” experiences, allowing small retailers to take credit card and debit card payments where they never could do so before, on significantly better terms.
Small merchants might also value the faster time to see funds deposited into accounts, plus increased sales volume, without significant capital investment. All of that makes the payment experience better for a merchant. Technology advantages are of relatively small value.
The point is that it is harder than it seems to offer a new product that is really 10 times better than what exists. When that happens, though, as with payment systems that turn a tablet or smart phone into a merchant point of sale terminal adoption can be rapid.
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Tablets Quickly Grabbing a Role in E-Commerce
Tablets quickly are establishing a role in e-commerce, passing smart phones after only a couple of years in existence. When tablets are used might have something to do with the growth. People often are "in transit" when using a smart phone, and more often are sitting on a couch when using a tablet. Also, tablets feature larger screens, and that means better display surfaces, better visuals and easier interaction than on a small screen.
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Analysts Slash RIM's Equity Price Targets, Others Simply Say the Firm is Doomed
At least 10 firms have cut their stock price targets by as much as 50 percent, with analysts at Citi Investment Research and Jefferies pegging RIMs stock at $5.00 per share, a 45 percent decrease from the closing bell yesterday.
Cannacord Genuity added that BlackBerry 10 will not save the company, and RIM needs to strongly consider selling the company in full as soon as possible. Some say nothing can save RIM.
Cannacord Genuity added that BlackBerry 10 will not save the company, and RIM needs to strongly consider selling the company in full as soon as possible. Some say nothing can save RIM.
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Do Mobile Service Providers Benefit from Device Subsidies?
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The problem is that the subsidies raise operating costs, and thus affect cash flow.
Of course, it can be argued that such subsidies also provide value, in part by reducing customer churn, as consumers often must sign contracts to qualify for the device subsidies.
Some would argue that although there is a positive churn reduction effect, the amount of reduced churn is only 27 percent of incremental subsidy cost for AT&T and 45 percent for Verizon.
This means AT&T is actually losing more than $2 billion by providing iPhone subsidies, for example, while Verizon is losing nearly $1 billion. Verizon's "losses" are lower because it has sold fewer iPhones than AT&T. Over time, that gap should close.
Mobile service providers aren’t happy about the cost of device subsidies that cause a drag on earnings. For AT&T, the financial impact of iPhone subsidies is clear. AT&T profit margins had grown for five straight years beginning in 2005, but reversed in 2010, apparently related directly to iPhone 4 demand and subsidies, BTIG argues.
BTIG argues the iPhone subsidies have reduced AT&T margins by at least 10 percent in 2011, for example.
But the trick is how to wean customers off the subsidies without seriously slowing the smart phone adoption rate, since most smart phone customers, given a choice, buy subsidized devices, with a contract, rather than paying full retail price and buying service without a contract.
Up to this point, the decision hasn’t been terribly difficult. A Motorola Mobility Holdings Droid 4 costs $549.99 without a contract and a 16-gigabyte Apple iPhone 4S, which runs only on 3G networks, is $649.99. Verizon Wireless offers both devices for $199.99 with a two-year data plan commitment.
It therefore comes as no surprise that nearly all customers choose to buy a subsidized device.
Up to this point, for example, Verizon has not charged a fee to its subscribers when customers decide to upgrade to a new device. But Verizon in April 2012 announced it would charge a $30 fee when that occurs. For Verizon Wireless, that could add up to $1 billion to Verizon’s annual earnings, and also boost profit margins, BTIG argues.
But that’s not all. Verizon Wireless now will provide incentives for users to pay full retail for their devices, using the bait of “unlimited” mobile data plans. That is likely to cause buyer sticker shock, though.
The new Verizon Wireless plan to end "unlimited" service and move users to capped plans primarily is aimed at matching end user data consumption to usage. But Verizon Wireless also appears to be using the opportunityto wean customers off device subsidies.
Verizon says "when we introduce our new shared data plans, unlimited data will no longer be available to customers when purchasing handsets at discounted pricing," Verizon says, unless of course the customer wants to pay full price for a device.
One might doubt the “full retail phone price, unlimited usage” plan will be chosen by many customers, though.
On the other hand, it is an interesting way of enticing some users to pay full retail for their devices. One wonders what Verizon might think of next, aside from simply raising the prices of devices sold with contracts.
In the meantime, suppliers such as Virgin Mobile and Cricket Communications should provide an early real-world test of demand, as both those mobile service providers will sell iPhones at full retail.
Smart phones have been very helpful for mobile service providers, boosting average revenue per user by driving mobile broadband subscriptions. But the subsidies generally used to spur sales are bcoming a major drag on earnings, and change is coming. Basically, service providers will have to risk lower sales growth, and less mobile broadband revenue growth, to limit handset subsidies. It might be a Faustian bargain.
In fact, what seems to have happened is that user behavior has changed, with users upgrading those “expensive” smart phones faster than they had generally been upgrading their feature phones, analysts at BTIG say.
As a result, U.S. mobile service providers plan to take steps to reduce handset upgrades as a way of raising operating margins. That is likely to affect sales of Apple iPhones, generally considered the most-expensive device to support.
AT&T, Sprint, Deutsche Telekom, Vodafone, America Movil and Telefonica are among firms planning to take steps that will slow iPhone sales in the coming year.
In the United States, BTIG expects iPhone sales to decline four million sequentially to nine million with the largest impact coming from AT&T, Apple’s largest customer.
In fact, AT&T says it has built its business model for 2012 around the idea that it will sell no more smart phones, overall, than it did in 2011, about 25 million units.
BTIG analysis suggests something quite significant. Despite the importance of smart phone accounts for growth of key broadband revenue, AT&T has decided to essentially cap smart phone sales to preserve its profit margins.
The impact should be clear: fewer iPhones sold by AT&T, and possibly fewer iPhones sold by other mobile services providers. That could lead to market share gains by other smart phone makes and models, or could spur Apple to produce lower-cost iPhones.What the carriers hope for is the ability to sustain average revenue per user growth, and higher profit margins.
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European Mobile Roaming Prices Drop July 1, 2012
Mobile data charges will be price capped starting July 1, 2012, with the limit set at no more than €0.70 a megabyte. That will represent a decline of about 75 percent, at least for European Union residents using their devices in other EU member countries.
The EU rule does not affect the prices providers can charge for data roaming outside the European Union. It isn't yet clear how much service provider revenue will be reduced.
Roaming revenues appear to represent around 3.68 percent of the total EU mobile market. Between
2007 and 2009, revenues for voice roaming fell quite significantly as a result of both lower
prices as well as lower volumes of traffic (-3,2%).
For SMS roaming, the impact of the regulation was seen in lower service provider revenues in 2009 compared to 2008.
For data services, the increase in volume of 43,6 percent between 2008 and 2009 combined with the imposed decrease in wholesale prices led to an overall decrease in revenues, the study says. At the retail level, however, where no price ceilings were imposed for data roaming, the total revenues in 2009 remained at the same level as in 2008.
The new European Union law means that prices for making a call abroad will be lowered to 29 cents per minute, while it will cost eight cents to receive a call, nine cents to send a text and 70 cents per MByte of download data used. This is a saving of 75 per cent compared to roaming costs in 2007.
Vodafone "Euro Traveller" allows U.K. customers to pay no more for calls, messages and data when they're on the continent as they do at home, after an opt-in payment of £3 a day.
The Everything Everywhere brand will offer customers the opportunity to buy "Travel Boosters" when they use their smartphones or 3G modems overseas.
Smartphone owners can pick 3, 10 or 50MB bundle for £1, £2.50 and £10, respectively - or 33p, 25p or 20p a megabyte. Each bundle lasts for 30 days or until the data has been used, whichever comes first.
For modem owners, the price bands are 3, 20, 50 and 200MB, priced at £1, £5, £10 and £35, respectively. Again, that's 33p, 25p, 20p and 17.5p a megabyte.
The EU rule does not affect the prices providers can charge for data roaming outside the European Union. It isn't yet clear how much service provider revenue will be reduced.
The EU market for mobile roaming services can be divided into voice services, SMS and
In 2009, the retail EU roaming market accounted for 4,777 billion EUR in revenues, a study noted.
Some 71 percent of that was voice roaming charges, 17 percent for data and around 11 percent for SMS.
The total wholesale market size in 2009 amounted to 1,253 billion EUR.
Roaming revenues appear to represent around 3.68 percent of the total EU mobile market. Between
2007 and 2009, revenues for voice roaming fell quite significantly as a result of both lower
prices as well as lower volumes of traffic (-3,2%).
For SMS roaming, the impact of the regulation was seen in lower service provider revenues in 2009 compared to 2008.
For data services, the increase in volume of 43,6 percent between 2008 and 2009 combined with the imposed decrease in wholesale prices led to an overall decrease in revenues, the study says. At the retail level, however, where no price ceilings were imposed for data roaming, the total revenues in 2009 remained at the same level as in 2008.
The new European Union law means that prices for making a call abroad will be lowered to 29 cents per minute, while it will cost eight cents to receive a call, nine cents to send a text and 70 cents per MByte of download data used. This is a saving of 75 per cent compared to roaming costs in 2007.
Vodafone "Euro Traveller" allows U.K. customers to pay no more for calls, messages and data when they're on the continent as they do at home, after an opt-in payment of £3 a day.
The Everything Everywhere brand will offer customers the opportunity to buy "Travel Boosters" when they use their smartphones or 3G modems overseas.
Smartphone owners can pick 3, 10 or 50MB bundle for £1, £2.50 and £10, respectively - or 33p, 25p or 20p a megabyte. Each bundle lasts for 30 days or until the data has been used, whichever comes first.
For modem owners, the price bands are 3, 20, 50 and 200MB, priced at £1, £5, £10 and £35, respectively. Again, that's 33p, 25p, 20p and 17.5p a megabyte.
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Google Now Launches
Real-time and personalized information, essentially streamed automatically, is the value.
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Thursday, June 28, 2012
MasterCard and Deutsche Telekom to Launch Payments
MasterCard Worldwide and Germany-based Deutsche Telekom group have signed a partnership agreement that will help the telco launch a prepaid PayPass application for its planned NFC mobile wallet.
The deal likely will be similar to a mobile-payments partnership announced by U.K.-based Vodafone Group and Visa, which uses a prepaid mechanism to load cash onto a user mobile device.
The deal likely will be similar to a mobile-payments partnership announced by U.K.-based Vodafone Group and Visa, which uses a prepaid mechanism to load cash onto a user mobile device.
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7-Eleven Stores to Sell PayPal Prepaid Cards
The PayPal Prepaid MasterCard card will be available at roughly 5,500 7-Eleven 7-Eleven stores nationwide once its rollout is completed this year.
Customers will be able to reload cash onto their cards at these locations, prepaid card marketer NetSpend Holdings says.
Here's the tie to mobile payments and banking. As with the M-Pesa service, retail agents are often the places users load cash and receive cash, even if the mobile device supplies the messaging function. Also, the way cash will be loaded onto many mobile payment accounts is by linking to an offline prepaid account of some kind, as with the Starbucks mobile app.
Customers will be able to reload cash onto their cards at these locations, prepaid card marketer NetSpend Holdings says.
Here's the tie to mobile payments and banking. As with the M-Pesa service, retail agents are often the places users load cash and receive cash, even if the mobile device supplies the messaging function. Also, the way cash will be loaded onto many mobile payment accounts is by linking to an offline prepaid account of some kind, as with the Starbucks mobile app.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Research in Motion Has 3.6% U.S. Device Share, Down from 41%
For Research in Motion, it has been a tough four years, as U.S. device market share dropped from 41 percent to 3.6 percent.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
A Third of Kenya's GDP Now Passes Through M-Pesa
If you were to nominate one mobile money service, today, as the most-successful on the planet, it would hard to propose any company but M-Pesa. By some accounts, about a third of Kenya’ gross domestic product passes through M-PESA and Safaricom earns more money from M-PESA than it does from text messaging, in part because SMS tends to be bundled, free of charge, in the payments system.
In August 2011, the Wall Street Journal reported Vodafone earned $21 million through its Kenyan subsidiary, with $15.6 million coming from M-Pesa in license fees. As of November 2011 M-Pesa had over 14 million subscribers (out of a population of about 40.5 million, according to the World Bank) and more than 28,000 agents across the country versus around 600 ATMs
M-Pesa is operator-centric, working through a SIM toolkit application that sits on all Safaricom SIM cards.
To put money on your phone, you walk into an authorized agent, hand over your money, then receive an SMS saying that the money has arrived on your phone. To send money to someone, you go to the pay menu on the phone, look for the person in your phonebook, or add their details, then send them the amount. They get a message saying, in effect, “If you have an M-PESA account, you now have 50 shillings [say] on your phone. If you are not an M-PESA account holder, go to any agent and they will give you the money.”
In August 2011, the Wall Street Journal reported Vodafone earned $21 million through its Kenyan subsidiary, with $15.6 million coming from M-Pesa in license fees. As of November 2011 M-Pesa had over 14 million subscribers (out of a population of about 40.5 million, according to the World Bank) and more than 28,000 agents across the country versus around 600 ATMs
M-Pesa is operator-centric, working through a SIM toolkit application that sits on all Safaricom SIM cards.
To put money on your phone, you walk into an authorized agent, hand over your money, then receive an SMS saying that the money has arrived on your phone. To send money to someone, you go to the pay menu on the phone, look for the person in your phonebook, or add their details, then send them the amount. They get a message saying, in effect, “If you have an M-PESA account, you now have 50 shillings [say] on your phone. If you are not an M-PESA account holder, go to any agent and they will give you the money.”
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Mobile TV is a Feature, not a Product, Yet
At the moment, services such as "TV Everywhere" that allow users to view some of the video they purchased as part of their subscription video services on a smart phone or tablet remain a "feature," and are not yet envisioned as revenue-generating "products."
That would not be an unusual pattern. Service provider Wi-Fi hotspot access has become a feature of a broadband subscription, whether provided by a fixed or mobile network. That seems to be the developing pattern for mobile TV services tied to another subscription.
Smartphone or tablet apps that are tied in to a cable TV show are definitely about "discovery and engagement," not advertising revenue, said Tammy Franklin, Scripps Networks Interactive senior vice president of affiliate sales and new media distribution.
For Verizon Wireless customers, unlimited U.S. domestic voice and texting essentially now are features of a mobile service, not discrete products. The basic connection fee includes both voice and texting.
That would not be an unusual pattern. Service provider Wi-Fi hotspot access has become a feature of a broadband subscription, whether provided by a fixed or mobile network. That seems to be the developing pattern for mobile TV services tied to another subscription.
Smartphone or tablet apps that are tied in to a cable TV show are definitely about "discovery and engagement," not advertising revenue, said Tammy Franklin, Scripps Networks Interactive senior vice president of affiliate sales and new media distribution.
For Verizon Wireless customers, unlimited U.S. domestic voice and texting essentially now are features of a mobile service, not discrete products. The basic connection fee includes both voice and texting.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
House Hearing on Video Market Shows Growing Pressure within the Ecosystem
The House Energy and Commerce Subcommittee on Communications and Technology held a hearing on whether existing communication laws address the demands of new technology. Such hearings do not, in and of themselves, mean much. But it is just one more sign that pressure is building within the video ecosystem.
Many speakers noted that regulations currently in place are outdated and stem from a time when cable companies controlled a much larger portion of the subscription video market.
Many speakers noted that regulations currently in place are outdated and stem from a time when cable companies controlled a much larger portion of the subscription video market.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Some Business Problems Cannot be Solved
Put yourself into the role of CEO at either Sprint or T-Mobile USA. What is the answer to the question of how you will catch up to Verizon Wireless and AT&T? And make us believe it.
It's tough. Tough, in fact, because there are some problems in business that are hard, perhaps impossible to fix. One of those intractable problems is market share structure in a well-developed industry.
Typically, a rule of thumb suggests, the market leader has twice the share of the number-two provider, which in turn has twice the share of number three, and then share falls off dramatically after that.
It might be more accurate to say that market share has a direct bearing on profit margins, as well.
The U.S. mobile market does not have precisely that classic stable distribution. Verizon, early in 2012, had about 32 percent share, AT&T about 26 percent.
Sprint had about 16 percent and T-Mobile USA had about 10 percent.
That suggests, to some of us, that the market remains unstable, and would be expected, over time to move in the direction of the "classic" structure. That doesn't mean real-world markets always assume the classic structure perfectly, only that the stable structure of a market will feature dramatic differences in both market share and profitability.
But regulators will have a say, having already firmly suggested that AT&T could not grow to 38 percent market share.
That suggests, over time, combinations of the smaller providers. The point is that one might argue there actually is little executives at firms such as T-Mobile USA and Sprint can do to fundamentally alter the direction of the market, no matter how talented they might be.
![](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_stwZyPvWv3c5PLoom2c6f2RptVGUaeWYZcz7zj2eUwJ_ZFSLCYPCJjXeIe-V31viu9kCxfBTak6yi9NeNiAd4pRfB99kgTtIH9QH6a63bB_megm_zn5u0jBgF6KA1qvSj4wy2XrVbyPv0mJVJoibB7KugthQN-c8BNVyhYflIBdTvDJE_07H63EGe0mjPw=s0-d)
Typically, a rule of thumb suggests, the market leader has twice the share of the number-two provider, which in turn has twice the share of number three, and then share falls off dramatically after that.
It might be more accurate to say that market share has a direct bearing on profit margins, as well.
The U.S. mobile market does not have precisely that classic stable distribution. Verizon, early in 2012, had about 32 percent share, AT&T about 26 percent.
Sprint had about 16 percent and T-Mobile USA had about 10 percent.
That suggests, to some of us, that the market remains unstable, and would be expected, over time to move in the direction of the "classic" structure. That doesn't mean real-world markets always assume the classic structure perfectly, only that the stable structure of a market will feature dramatic differences in both market share and profitability.
But regulators will have a say, having already firmly suggested that AT&T could not grow to 38 percent market share.
That suggests, over time, combinations of the smaller providers. The point is that one might argue there actually is little executives at firms such as T-Mobile USA and Sprint can do to fundamentally alter the direction of the market, no matter how talented they might be.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Google Isn't Making Any Profit From Sales Of The New Nexus 7 Tablet
In fact, Rubin says the company is eating the marketing costs for the device. Like Amazon, at least for the moment, the device is seen as a platform for creating revenue streams other ways.
But that, in general, is probably the way Google approaches its entire set of efforts in consumer electronics: creating products that drive usage and then revenue from the software and content products it creates.
That is more the "Amazon" strategy than the "Apple" strategy.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
What Kind of Company is Google Becoming?
With the launch of its first tablet, a seven-inch device that seemingly is aimed more at Amazon than Apple, Google has added yet another device to the list of gadgets it now produces, ranging from smart phones to a new home entertainment system.
The new tablet, priced at $199, makes Google an even more complicated company. The $299 home-entertainment player called Nexus Q likewise further blurs Google's identity, you might argue.
Google always has said it is a software company. Its revenue comes mostly from advertising, especially from Google's search engine. That has made Google the paramount example of something we haven't seen before, namely a software company whose revenue comes from advertising, primarily.
Some of us would have said that Google might as well be called a media company, as well, with its YouTube operations and especially revenue model. What sort of company makes its money from advertising? Traditionally, only a "media" firm.
But now Google is becoming a supplier of consumer electronics as well. Ignoring for the moment all the other lines of business Google is experimenting with, it has become even harder to figure out what to "call" Google.
Google itself still says its mission is to organize all the world's information. But it also says it does "search" and products that "make the web better."
One has to conclude that Google simply is at a point where it is changing into "something else," and it is hard to describe what that "something else" actually might be.
The new tablet, priced at $199, makes Google an even more complicated company. The $299 home-entertainment player called Nexus Q likewise further blurs Google's identity, you might argue.
Google always has said it is a software company. Its revenue comes mostly from advertising, especially from Google's search engine. That has made Google the paramount example of something we haven't seen before, namely a software company whose revenue comes from advertising, primarily.
Some of us would have said that Google might as well be called a media company, as well, with its YouTube operations and especially revenue model. What sort of company makes its money from advertising? Traditionally, only a "media" firm.
But now Google is becoming a supplier of consumer electronics as well. Ignoring for the moment all the other lines of business Google is experimenting with, it has become even harder to figure out what to "call" Google.
Google itself still says its mission is to organize all the world's information. But it also says it does "search" and products that "make the web better."
One has to conclude that Google simply is at a point where it is changing into "something else," and it is hard to describe what that "something else" actually might be.
![](http://www.google.com/about/company/images/company-products.png)
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Wednesday, June 27, 2012
Why Google has gone "Mobile First"
If you want some evidence about why Google has gone "mobile first" in its product strategy, a few key statistics Google announced tell the story well.
Google says it has 250 million total users, 150 million monthly users and 75 million daily users, with more usage from mobile than desktop TechCrunch says.
Google says it has 250 million total users, 150 million monthly users and 75 million daily users, with more usage from mobile than desktop TechCrunch says.
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Is Telecom Italia Going to Structurally Separate Itself?
A unit of Cassa Depositi & Prestiti may invest three billion euros in a partnership with Telecom Italia that would structurally separate the Telecom Italia network from the retail services unit. Since 2008, Telecom Italia has operated its network as a functionally separate entity with extensive wholesale operations.
The new rumor suggests that Telecom Italia is prepared to go the next step and fully separate the network operations part of its business, Bloomberg reports.
Telecom Italia's "Open Access" unit, which has the network infrastructure and employs a 19,000 people in maintenance and operations, might be in play, whether the recent report is true or not (Telecom Italia denies the rumor).
CDP also says it “isn’t aware” of the proposal. What might be more true is that Telecom Italia is seriously considering structurally separating its network assets business from its retail telecom services business.
Italy lags Europe in terms of broadband penetration with only 49 percent of households connected against a European average of 61 percent, according to Eurostat data.
Some observers in Europe believe competition will not be sufficient to create conditions for faster broadband investment. Carriers actually argue that current regulations actually discourage that investment.
The rumored Telecom Italia move might be a way that the telco could essentially give the problem to somebody else. Since 1995, Telecom Italia has operated only fixed networks, as its mobile operations were spun off into a separate company.
Debt reduction seems to be driving the thinking. Other European telcos are divesting assets as well, in order to trim debt and prepare for investments in mobile services.
The new rumor suggests that Telecom Italia is prepared to go the next step and fully separate the network operations part of its business, Bloomberg reports.
Telecom Italia's "Open Access" unit, which has the network infrastructure and employs a 19,000 people in maintenance and operations, might be in play, whether the recent report is true or not (Telecom Italia denies the rumor).
CDP also says it “isn’t aware” of the proposal. What might be more true is that Telecom Italia is seriously considering structurally separating its network assets business from its retail telecom services business.
Italy lags Europe in terms of broadband penetration with only 49 percent of households connected against a European average of 61 percent, according to Eurostat data.
Some observers in Europe believe competition will not be sufficient to create conditions for faster broadband investment. Carriers actually argue that current regulations actually discourage that investment.
The rumored Telecom Italia move might be a way that the telco could essentially give the problem to somebody else. Since 1995, Telecom Italia has operated only fixed networks, as its mobile operations were spun off into a separate company.
Debt reduction seems to be driving the thinking. Other European telcos are divesting assets as well, in order to trim debt and prepare for investments in mobile services.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Automatic Mobile Phone Public Hotspot Access?
Some 37 communications companies around the world have signed up to test Hotspot 2 Wi-Fi roaming and billing.
Aircel, AT&T, Boingo Wireless, BT, BskyB (The Cloud), China Mobile, Deutsche Telekom, DOCOMO InterTouch, Everything Everywhere, FON Wireless, Gowex, Indosat M2, HK CSL, KDDI, iBAHN, KT Corporation, Meteor Network, NTT DOCOMO, Oi Wi-Fi, Orange, PCCW Mobile, Portugal Telecom TMN, SK Telecom, Shaw Communications, Smart Communications, Softbank Mobile, StarHub, Swisscom, Talk Talk, TeliaSonera, Telefonica, TIM Brasil, Time Warner Cable, Tomizone, True Corp., Trustive and TTNET are among the firms participating.
The Wireless Broadband Alliance says the trials of "Next Generation Hotspots" will test interoperability and performance of new gear that will give users easier access to a far greater number of public Wi-Fi access points around the world.
The trials will take place in the fourth quarter and employ the first generation of Wi-Fi "Passpoint" equipment which the Wi-Fi Alliance today announced it will start approving. The WBA expects the first NGH deployments to take place in H1 2013.
Next Generation Hotspots will allow users to gain access without the need for user names and passwords, while also allowing operators to establish relationships with each other so their users can access a wide variety of hotspots in their own country and around the world.
HotSpot 2 might also have the potential to be disruptive, though, some might argue.
It has been some time since anyone seriously argued that public Wi-Fi hotspots could be a viable alternative to mobile infrastructure. But at least to some extent, HotSpot 2 could create WiFi networks extensive enough, and easy enough to use, that some contestants could offer Internet access either as a non-mobile but outside the home service, or simply offload mobile traffic to the hotspots, as most of the mobile operators hope to do.
Aircel, AT&T, Boingo Wireless, BT, BskyB (The Cloud), China Mobile, Deutsche Telekom, DOCOMO InterTouch, Everything Everywhere, FON Wireless, Gowex, Indosat M2, HK CSL, KDDI, iBAHN, KT Corporation, Meteor Network, NTT DOCOMO, Oi Wi-Fi, Orange, PCCW Mobile, Portugal Telecom TMN, SK Telecom, Shaw Communications, Smart Communications, Softbank Mobile, StarHub, Swisscom, Talk Talk, TeliaSonera, Telefonica, TIM Brasil, Time Warner Cable, Tomizone, True Corp., Trustive and TTNET are among the firms participating.
The Wireless Broadband Alliance says the trials of "Next Generation Hotspots" will test interoperability and performance of new gear that will give users easier access to a far greater number of public Wi-Fi access points around the world.
The trials will take place in the fourth quarter and employ the first generation of Wi-Fi "Passpoint" equipment which the Wi-Fi Alliance today announced it will start approving. The WBA expects the first NGH deployments to take place in H1 2013.
Next Generation Hotspots will allow users to gain access without the need for user names and passwords, while also allowing operators to establish relationships with each other so their users can access a wide variety of hotspots in their own country and around the world.
HotSpot 2 might also have the potential to be disruptive, though, some might argue.
It has been some time since anyone seriously argued that public Wi-Fi hotspots could be a viable alternative to mobile infrastructure. But at least to some extent, HotSpot 2 could create WiFi networks extensive enough, and easy enough to use, that some contestants could offer Internet access either as a non-mobile but outside the home service, or simply offload mobile traffic to the hotspots, as most of the mobile operators hope to do.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Tuesday, June 26, 2012
The Difference Between Operating System and Device Share
![](http://1.bp.blogspot.com/-DZCIc1ZmcjU/T-pXYMG_ZwI/AAAAAAAAHes/7MvpMy9LiIo/s400/smartphone-shipments.png)
Operating system share arguably tells you less, since Android and Microsoft operating systems are multi-vendor, while Research in Motion and Apple iOS are single vendor.
That could change if Research in Motion succeeds in splitting its services business from its handset business, or if Nokia's ownership changes.
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PayPal Goes "Mobile First"
PayPal has decided to consolidate all PayPal product groups into one global product organization led by Hill Ferguson, who was previously in charge of the mobile organization. "Mobile is simpler by definition," says David Marcus, PayPal president.
Some of us would say PayPal is only the latest application provider to go "mobile first" in its product strategy. That's sound thinking.
Consider that many mobile users prefer mobile Internet access and apps to fixed network usage. Hispanics in the United States, for example, "over-index" for mobile application usage. Almost 50 percent of U.S. Hispanic Internet traffic is driven by mobile devices, for example, according to Troy Brown, one50one founder and president.
According to industry research firm Nielsen, in the US, Hispanics on average spend 20 percent more time on streaming video over mobile than the rest of the population (four hours and 20 minutes per month versus three hours and 37 minutes).
Research from Google indicates that African-Americans over-index versus other segments in accessing video-sharing websites via their smart phones (49 percent versus 43 percent).
Anecdotally, we at one50one see a much higher percentage of African-American and Hispanic audiences watching live performances on their mobile devices, says Brown.
Some of us would say PayPal is only the latest application provider to go "mobile first" in its product strategy. That's sound thinking.
Consider that many mobile users prefer mobile Internet access and apps to fixed network usage. Hispanics in the United States, for example, "over-index" for mobile application usage. Almost 50 percent of U.S. Hispanic Internet traffic is driven by mobile devices, for example, according to Troy Brown, one50one founder and president.
According to industry research firm Nielsen, in the US, Hispanics on average spend 20 percent more time on streaming video over mobile than the rest of the population (four hours and 20 minutes per month versus three hours and 37 minutes).
Research from Google indicates that African-Americans over-index versus other segments in accessing video-sharing websites via their smart phones (49 percent versus 43 percent).
Anecdotally, we at one50one see a much higher percentage of African-American and Hispanic audiences watching live performances on their mobile devices, says Brown.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Smart Phone Sales Could Drop $40 Billion by 2016 if People Use Their Own Phones at Work
Paradoxically, what is good for enterprises and small businesses might not be so good for mobile handset providers or mobile service providers.
The growing number of workers that bring their own smart phones into the mobile workplace means enterprises and other businesses do not have to buy devices for their workers. And if employers reimburse workers for service charges related to their personal devices, employers do not have buy additional mobile subscriptions.
So ARCchart estimates smart phone sales could drop by $40 billion by 2016. The ARCchart study shows the complex impact of people using their own devices for personal use and work, instead of using one device for work and another for personal use.
The growing number of workers that bring their own smart phones into the mobile workplace means enterprises and other businesses do not have to buy devices for their workers. And if employers reimburse workers for service charges related to their personal devices, employers do not have buy additional mobile subscriptions.
So ARCchart estimates smart phone sales could drop by $40 billion by 2016. The ARCchart study shows the complex impact of people using their own devices for personal use and work, instead of using one device for work and another for personal use.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
17% of Mobile Owners Do "Most" of Their Online Activities on the Mobile
Most do so for convenience, but for some their phone is their only option for online access. That has obvious implications for the evolution of the broadband access business in the United States. What might now be only a convenience could later change into a preferred behavior, particularly for some users who have access to fourth generation networks and do not watch much online video.
Some 88 percent of U.S. adults own a cell phone of some kind as of April 2012, and more than half of these cell owners (55 percent) use their phone to go online. That, the researchers say, represents a notable increase from the 31 percent of mobile device owners who said that they used their phone to go online as recently as April 2009.
Also, 31 percent of these current cell internet users say that they mostly go online using their cell phone, and not using some other device such as a desktop or laptop computer. That is a significant number, since adoption of most products and services often assumes a faster adoption curve once 10 percent of users are reached.
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Virgin Mobile USA to Offer iPhone on June 29, 2012
Virgin Mobile USA announced today it will offer iPhone to its prepaid customers beginning Friday, June 29. Virgin Mobile USA will offer iPhone 4 and iPhone 4S with its "Beyond Talk" unlimited data and messaging plans as low as $30 per month on the Sprint Nationwide Network.
Here's why the move is important. Up to this point, the "prepaid" mobile service providers have been unable to sell the Apple iPhone, with some obvious implications for customer attraction and retention. Since Virgin and MetroPCS now sell the iPhone, some of that disadvantage is removed.
To be sure, consumers at Virgin Mobile USA and MetroPCS will have to pay full retail for their devices, but as some will note, at $50 a month, a consumer sort of "breaks even" after six months of service.
The more-important implication, though, will be seen in consumer willingness and ability to pay full retail for devices, getting service providers out of the device subsidy game. Virtually all global mobile carriers would prefer to be in that situation, and we might now get a true test of consumer willingness to pay full retail for their coveted devices.
The iPhone will be available without a contract and with no fees for activation or roaming. New and existing customers can purchase iPhone atwww.virginmobileusa.com, RadioShack, Best Buy and select local retailers.
Here's why the move is important. Up to this point, the "prepaid" mobile service providers have been unable to sell the Apple iPhone, with some obvious implications for customer attraction and retention. Since Virgin and MetroPCS now sell the iPhone, some of that disadvantage is removed.
To be sure, consumers at Virgin Mobile USA and MetroPCS will have to pay full retail for their devices, but as some will note, at $50 a month, a consumer sort of "breaks even" after six months of service.
The more-important implication, though, will be seen in consumer willingness and ability to pay full retail for devices, getting service providers out of the device subsidy game. Virtually all global mobile carriers would prefer to be in that situation, and we might now get a true test of consumer willingness to pay full retail for their coveted devices.
The iPhone will be available without a contract and with no fees for activation or roaming. New and existing customers can purchase iPhone atwww.virginmobileusa.com, RadioShack, Best Buy and select local retailers.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Gaming Revenues Shifting Away from Consoles
U.S. video game sales totaled $24.75 million in 2011, mostly on traditional content to be played on dedicated gaming consoles, NPD Group data indicates.
But spending is slowly migrating from console games to non-traditional and more-casual game formats, according to eMarketer.
Between 2009 and 2011, revenues for computer and console games shrank from $10.6 billion to $9.3 billion, for example.
Games delivered by mobile apps, social networks, downloads and other channels were the newer formats.
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Monday, June 25, 2012
DirecTV, DishGetting Justice Department Scrutiny Over Programming Contracts?
DirecTV and Dish Network Corp. have received requests from the U.S. Justice Department about pricing contracts with television networks, part of a broader probe into whether subscription TV distributors are preventing the emergence of Internet-based competitors, according to Bloomberg.
Ultimately, many of us would argue, the older subscription TV paradigm cannot be challenged unless content owner contracts allow competitors access to the professionally-produced programming consumers are used to getting from their subscription TV providers.
Just as obviously, neither content owners nor distributors will do anything to jeopardize the existing economics of the business. So the wild card is government intervention to force change.
The Justice Department sent civil investigative demands, which are similar to subpoenas, to DirecTV and Dish, the two largest U.S. satellite-TV providers.
The government wants information about "most- favored-nation" provisions, which give distributors companies favorable pricing and terms. Those contracts also restrict Internet delivery rights.
Regulators are concerned that the conditions are preventing smaller startups and Internet-video distributors from obtaining programming rights. If DoJ finds the most-favored nation clauses are anti-competitive, and bars them, there is at least a chance of disruption in the video market.
Ultimately, many of us would argue, the older subscription TV paradigm cannot be challenged unless content owner contracts allow competitors access to the professionally-produced programming consumers are used to getting from their subscription TV providers.
Just as obviously, neither content owners nor distributors will do anything to jeopardize the existing economics of the business. So the wild card is government intervention to force change.
The Justice Department sent civil investigative demands, which are similar to subpoenas, to DirecTV and Dish, the two largest U.S. satellite-TV providers.
The government wants information about "most- favored-nation" provisions, which give distributors companies favorable pricing and terms. Those contracts also restrict Internet delivery rights.
Regulators are concerned that the conditions are preventing smaller startups and Internet-video distributors from obtaining programming rights. If DoJ finds the most-favored nation clauses are anti-competitive, and bars them, there is at least a chance of disruption in the video market.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Global Video Business Will Be More Fragmented in 2016
The global subscription video market, which has been shared between cable and satellite providers, will see a significant amount of share taken by telcos by 2016.
Video services revenue on a global basis was $261 billion in 2011 and is forecast to grow to $371 billion by 2016, Infonetics Research estimates.
Globally, the top 20 subscription-TV revenue leaders accounted for 50 percent of the revenue, while the top 20 subscriber leaders represented just 30 percent of subscribers.
In the U.S. market, satellite share has been relatively stable at about 32 percent to 33 percent, while telco market share is growing.
Whether "telco" share continues to creep up, or is transformed, remains a question. Many observers long have anticipated that, one day, U.S. telcos would simply both U.S. providers. In essence, telco share could, in that scenario, rise to more than 40 percent of the U.S. market.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Is Voice a Product or a Feature?
It appears the Australian National Broadband Network is setting wholesale pricing policies that will raise new questions about the ways voice services can be packaged for sale to consumer customers.
Each wholesale connection apparently costs a retailer $24, and both broadband and voice are included and required at that price. In other words, a retail provider "must" buy both broadband and voice capabilities from the NBN.
Each wholesale connection apparently costs a retailer $24, and both broadband and voice are included and required at that price. In other words, a retail provider "must" buy both broadband and voice capabilities from the NBN.
That raises an interesting question. Will re?"tailers sell voice and broadband separately, or as a bundle? And if they do, will consumers reset their expectations about the features a broadband connection "typically" provides, and what it costs?
In other words, is domestic voice a "feature" or a "product?" There are growing signs in the U.S. market that service providers are starting to consider shifting retail packaging from "voice as a product" to "voice as a feature." The new Verizon Wireless "Share Everything" plan moves in that direction, with voice and text messaging essentially becoming part of a basic "use the network" connection fee.
Charter Communications is reported to be considering ending all sales of consumer voice as a stand-alone product. Apparently, in the future Charter voice will be a product that only can be purchased as part of a bundle including something else, the obvious candidates being broadband access or video entertainment.
That's a half step towards making voice a feature of a network connection fee. Just how far the trend might go is not yet clear. But a reasonable person might argue that making voice services a feature, rather than a product, is the "best" way to assure future voice revenue.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Charter Move Shows Why Fixed Network Voice Will Not Ever Go to "Zero"
Since the number of fixed network voice subscriptions has been dropping for at least a decade, some might suspect that there is no end to the decline. Some of us have argued that there is some equilibrium point that will be reached, when the number of subscriptions actually stabilizes.
A new policy by Charter shows why that will be the case. Apparently, Charter is going to stop selling voice subscriptions as a discrete product, and will in the future only sell voice in conjunction with at least one other service, either entertainment video or broadband access.
"Going forward, we will not offer Charter Phone as a standalone product," a Charter spokesman apparently has confirmed.
If you think about it, that also is how Verizon Wireless will price its "Share Everything" services. use of the Verizon Wireless network requires a basic subscription that includes unlimited U.S. domestic voice and texting, with variable payments for mobile broadband service.
The point is that if voice becomes a feature of a broadband access service, the number of voice accounts in service will drop only so far as broadband access or entertainment video.
A new policy by Charter shows why that will be the case. Apparently, Charter is going to stop selling voice subscriptions as a discrete product, and will in the future only sell voice in conjunction with at least one other service, either entertainment video or broadband access.
"Going forward, we will not offer Charter Phone as a standalone product," a Charter spokesman apparently has confirmed.
If you think about it, that also is how Verizon Wireless will price its "Share Everything" services. use of the Verizon Wireless network requires a basic subscription that includes unlimited U.S. domestic voice and texting, with variable payments for mobile broadband service.
The point is that if voice becomes a feature of a broadband access service, the number of voice accounts in service will drop only so far as broadband access or entertainment video.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Are Telecom Profit Margins "Excessive?"
Gross revenue is never the same thing as "profit." But many businesses are so capital intensive that actual profits are slim. In fact, though it often is believed that oil industry profits are out-sized, they actually aren't, according to the U.S. Census Bureau, Standard & Poors and the American Petroleum Institute.
Oil and natural gas industry profits were about 6.7 percent in the third quarter of 2011, for example.
Telecom service provider profit margins aren't that much different. Verizon has a six-percent profit margin while AT&T has about an 11 percent margin.
Oil and natural gas industry profits were about 6.7 percent in the third quarter of 2011, for example.
Telecom service provider profit margins aren't that much different. Verizon has a six-percent profit margin while AT&T has about an 11 percent margin.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Are Tablets Better Commerce Vehicles than Smart Phones?
Tablets are "better"than smart phones as a channel for commerce and shopping, in part because users are more likely to purchase after searching for a local business and tend to spend more per purchase than mobile phone users, a study sponsored by the Online Publishers Association has found.
Some studies also show that tablet purchases are larger than those from PCs. According to the 2012 Shop.org and Forrester Research "State of Retailing Online" survey, 49 percent of retailers say their average order value from tablets is now higher than traditional web sales.
Nearly three in 10 (28%) retailers say they are seeing about the same average order value from tablets as their website.
Some studies also show that tablet purchases are larger than those from PCs. According to the 2012 Shop.org and Forrester Research "State of Retailing Online" survey, 49 percent of retailers say their average order value from tablets is now higher than traditional web sales.
Nearly three in 10 (28%) retailers say they are seeing about the same average order value from tablets as their website.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Consumers Will Store More Than 1/3 of Their Digital Content in the Cloud by 2016
The desire to share content and to access it on multiple devices will motivate consumers to start storing a third of their digital content in the cloud by 2016, according to Gartner.
Gartner said that just seven percent of consumer content was stored in the cloud in 2011, but this will grow to 36 percent in 2016.
"Historically, consumers have generally stored content on their PCs, but as we enter the post-PC era, consumers are using multiple connected devices, the majority of which are equipped with cameras." said Shalini Verma, principal research analyst at Gartner. "With the emergence of the personal cloud, this fast-growing consumer digital content will quickly get disaggregated from connected devices."
Gartner predicts that worldwide consumer digital storage needs will grow from 329 exabytes in 2011 to 4.1 zettabytes in 2016. This includes digital content stored in PCs, smart phones, tablets, hard-disk drives (HDDs), network attached storage (NAS) and cloud repositories.
Average storage per household will grow from 464 gigabytes in 2011 to 3.3 terabytes in 2016.
Gartner said that just seven percent of consumer content was stored in the cloud in 2011, but this will grow to 36 percent in 2016.
"Historically, consumers have generally stored content on their PCs, but as we enter the post-PC era, consumers are using multiple connected devices, the majority of which are equipped with cameras." said Shalini Verma, principal research analyst at Gartner. "With the emergence of the personal cloud, this fast-growing consumer digital content will quickly get disaggregated from connected devices."
Gartner predicts that worldwide consumer digital storage needs will grow from 329 exabytes in 2011 to 4.1 zettabytes in 2016. This includes digital content stored in PCs, smart phones, tablets, hard-disk drives (HDDs), network attached storage (NAS) and cloud repositories.
Average storage per household will grow from 464 gigabytes in 2011 to 3.3 terabytes in 2016.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Do Millennials Really Complain More Often Than Others, Online?
Overall, about 82 percent of online reviews are "positive."(click on the image for a larger view)
Baby Boomers are slightly more positive than the other generations, assigning three percent more five-star ratings to products than members of other generations tend to do.
Millennials give one percent more one-star product ratings, the lowest rating possible; the most of the three generations studies.
Millennials are "decidedly middle-of-the-road," Bazaarvoice says, creating the highest percentage (seven percent) of three-star reviews, but the fewest one-star (very negative) and five-star (very positive) product ratings.
You might argue that Millennials are the most realistic reviewers, in fact. If life is a "Bell" curve, with the great mass of instances "in the middle," and only small percentages at the very high or very low ends of the scale, in terms of product quality, then the Millennial ratings make perfect sense.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
Verizon Wireless "Share Everything" Helps Marketers Using Text Messaging
Obviuously, as more subscribers shift to Verizon Wireless "Share Everything" plans, there will be implications for application providers and other third parties whose customers use the Verizon network.
The plan isn't favorable to streaming video providers, is relatively neutral where it comes to most other application providers and actually could help marketers who use either text messaging or multimedia message service.
Historically, text message marketers have had to worry about annoying prospects by essentially making users pay to receive messages. Under the new "Share Everything" plans, that won't be an issue.
The central annoyance still will be the sense of "invasion" on the part of users to unobtrusive messages in a channel that is considered highly personal and private. No change of plans is going to change that constraint.
The plan isn't favorable to streaming video providers, is relatively neutral where it comes to most other application providers and actually could help marketers who use either text messaging or multimedia message service.
Historically, text message marketers have had to worry about annoying prospects by essentially making users pay to receive messages. Under the new "Share Everything" plans, that won't be an issue.
The central annoyance still will be the sense of "invasion" on the part of users to unobtrusive messages in a channel that is considered highly personal and private. No change of plans is going to change that constraint.
![](http://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcZKytcq7SP9wqOH8QHue0_NcliO43bCMzwONgkGlugZFbWs0Z7KNRnPVmI2syWUrr4XHZIH9r5gRkMCfsq2v2EWQujspRDp3Qf0ciVQ1K75sJyLphN89Dn2uicwR0eA/s133/Gary_headshot_2019+%281%29.png)
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