Steering through fuzzy mobility ecosystem
Sweeping transformation in installed base for connected computing devices (CCD) by 2017 to impact consumers and enterprises like never before. PC population in total CCD shrinks drastically from 65.2% in 2011 to 44.7% in 2013 and projected to slide further to 26.9% in 2017. Both IDC and Gartner endorse the trend as immediate inevitability. While this was triggered by the recent phase of mobile revolution that ended at a breathtaking speed, there is still more to come. It also throws up a plethora of exciting opportunities amidst fuzziness on many fronts.
Exciting but fluid with too many implications for mobility ecosystem players……………………….
The flurry of knee jerk reactions by both corporate giants and SMBs (Small and Medium Businesses) suggests that the industry is seeking a more stable equilibrium that currently appears elusive. No doubt, the complex dynamics within the mobility ecosystem is entering a new era as enterprises are grappling for innovative solutions to steer through the fuzzy mobility space.
Not only the leaders like Google, Microsoft, Apple, Samsung, Amazon, Facebook, HP, Intel and IBM are busy reshuffling their offerings and operating arena, there is a new genre of SMBs who are trying to jump the new bandwagon. Now all the market players – be it hardware, software, infrastructure or services – are jostling to reposition themselves as new playing fields, game plans and business models emerge at amazing pace in the mobility ecosystem. Microsoft goes for free mobile software along with Office for iPad. Intel is set to focus on low cost chips for mobile devices to play the volume game defying the immediate negative impact on its bottom line. The scramble for advertisements and other revenue channels within mobility space started some time back but not all could successfully crack that.
Whereas, a new configuration in the competitive space of hardware, components, operating software, infrastructure and platforms are being sorted out among Apple, Samsung, Google, Lenovo and several others. These are just few of the instant fallout as new strategies are being worked out. IT spending plans of consumers and enterprises will be impacted too.
Several factors coupled with user preferences will continue to spur mobility………….
It took less than 6 years for mobility to win over the computing world with smartphones and tablets zooming from zero bases to dethrone PCs (good old desktops along with laptops). In 2013, mobile devices exceeded 80% of all standard connected computing devices shipped! This trend gets swiftly reinforced as growth in desktops and laptops start sliding precipitously and shrink in absolute size. Several favorable factors, on the other hand, will continue to generate this new wave of mobile devices.
Factors driving mobility and user behavior
Apart from the technology embedded in mobile devices, far more powerful and miniaturized chips as well as remarkable UI-UX enhancements triggered this mobile revolution. In fact, these were supply side responses to other positive developments. Significant contributor to this unprecedented demand for mobile devices in US had been 5X broadband speed and wide access to LTE (Long Term Evolution) networks that in turn led to the amazing proliferation of videos in internet traffic and mobile apps that quickly spread across rest of the world. Additionally, there had been massive deployment of cloud infrastructure, social technologies and applications that attracted enterprises and consumers into the mobility space. So, mobility devices like smart phones, tablets and their likes mushroomed from almost zero bases in 2007 with much of it being evident during the last four years. Further improvement in mobility infrastructure and enablers will lead to the extensive penetration of newer kinds of mobility devices including those in the IoT (Internet of Things) domain.
While advising networks and ecosystems to power their business and knowledge acceleration, we at SharePract, keep evaluating these trends. Both large corporates and business hubs are getting ready to ride on these opportunities. Our future ecosystems design and advisory practices are constantly being honed to adjust to these trends. We are certainly excited to ride on the emerging opportunities and track the ecosystems and business models that emerge. The most discernible fallout we witness is the close alliance between corporates and SMBs to come up with innovative solutions that we like to champion (more of that in Part 3).
Adjusting to a new era of mobility ecosystems………………..
Clearly the new contours of mobility ecosystem are still being carved out. The dots are more visible now but joining them will take time. There are too many moving parts and several rounds of product, services and infrastructure innovations are underway to adjust to the new ecosystem configurations. At this juncture, newly emerging market structures, dominance of apps (as value gets build around them) alongside multiple ecosystems are becoming evident. As market develops, the control point shifts with service distribution and user aggregation remaining critical. Both existing and new players are grappling with these challenges and SharePract service deployment plans had been dovetailed around them.
Hardware and boxes get further commoditized…………………….
The focus of hardware shifts from PCs to mobile devices and ultimately to some combination of multiple mobile as well as connected end devices. Within hardware, intra-segment battles and mutual coexistence of tablets, phablets, wearables, IOTs for industrial, government and private usage would be the likely scenario. Low cost tablets and similar mass market mobile products dedicated to education and entertainment are also expected to disrupt certain segments of hardware. BYOD (Bring Your Own Device) is gaining popularity among mobility devices and catching up fast among large corporates, SMBs and institutions.
The market for mobile devices (particularly smartphones and tablets) will now grow faster in APAC and rest of the world following the extensive penetration in US, Canada, Japan and advanced Europe. There will be realignment among component and subcomponent vendors towards mobility devices. We can see quite a bit of strategic shift from PC making ecosystem to that of mobility devices. Boxes matter less and there will be further commoditization of hardware with profit squeeze compelling further innovation by hardware companies, who may even repackage their entire offerings. Vendors like Intel shifting attention towards mass market mobility are already feeling the heat of lower margins. There is also a spurt in investment for mobility display devices and screens ranging from smartphones and tablets to other end point devices.
Unleashing a stream of innovative solutions for enterprise software and applications…………………..
Now software development, platforms, infrastructure, developer assets and tools are to undergo discernible changes with innovative solutions coming from the ultimate winners. In the area of platforms, Android wins convincingly over iOS as Windows get further squeezed. Developer choices follow the market undercurrents with strong inclination towards iOS and Android given the existing range of products. Beyond the current spectrum of mobility devices, things may change and prospects for disruption in the market cannot be ruled out. Over time, we can expect new acceptable standards and protocols to gain more attention. Apps and apps architecture, conflict among OS providers and new revenue channels are areas where the new dynamics of current game plan as well as business model would come into play. These are bound to unleash innovative solutions. At the same time, there will be huge provisioning and management opportunities with the shift from enterprise mobility management to that IoT mobility management (highlighted in the section below).
Industry innovations will depend on how changes take place in networks, operating systems, hardware configurations, backend systems, APIs and the data management capabilities. And finally, most of these innovations have to come from applications, content, services, delivery, developer tools, analytics and security related initiatives. This surely opens up wide ranging opportunities for market players who need to set their eyes on the ecosystem dynamics. New revenue channels can be created through APIs, building value on apps, big data distribution and managing IoTs. On the product and hardware side, better user experiences, connectivity and tracking areas of value addition would be the key. There are still many areas that remain open and needs to be worked out by the market players as transitions get underway with IoT. Another such phase of transition with IoT will result in a multiplicity of business models opening up as vastly expanded set of things that get connected to the existing internet.
A peep into the ensuing transition across IOT family…………………..
It is only reasonable to expect more disruption as IoT ecosystem gathers momentum. IDC projects IoT installed base to escalate from 19 billion in 2012 to 30 billion by 2020 with a value of whopping $ 8.9 trillion. IoT ecosystem to comprise applications, analytics, platforms, devices, networks, services, security and various intelligent systems along with next generation infrastructure. Wearable computing is still in the launching process with market size gradually rising from 3 million units in 2013 to over 110 million by 2018. It is noteworthy that wearables will gobble up some segments of the existing mobile space and compete with other mobile devices. It also opens up new market for developers and strategic partnerships (some are already underway). With IoT and wearables, the communication interface to undergo another wave of evolution. Privacy concerns are bound to pose challenges. We are also likely to see more of the BYOD trend for wearables given the personalized nature of these end devices.
More than $ 20 billion wearables market by 2018
Spending, investment and collaboration networks in mobility space……………………
A lot of research, survey and collaborative initiatives are being undertaken to decipher IT spending, consumer behavior, investment and collaboration networks associated with the ongoing transformation in the mobility ecosystem. For sure, IT spending is going to be far more strategic and knowledge driven given the myriad of new genre products around the confluence of mobile, social, cloud and big data.
Interestingly SMB 2.0 – the more agile small and medium business community is well set to drive IT spending and consumer behavior not only in US and Europe but also across APAC and rest of the world. This buoyancy in IT spending spurred by new range of products and services is also applicable for the developing countries. While SMBs had always been vigilant on cash flow, their focus on network, mobility, security, cloud and big data is now the strongest ever. It is not just about upgrading PCs and enhancing server or internet infrastructure that takes up lot of attention and spending. Employee owned BYOD, expanded apps and more usage of SaaS in Cloud are emerging as major areas of spending.
It is projected that between 2013 and 2018, the rise in SMB spending in cloud and mobile will be much faster than any other domain of IT. IDC projects SMB cloud and mobile spending to shoot up during this 6 year period with a total of $ 150-180 billion per year. If this is actually realized, SMBs emerge as major driver of the new mobility ecosystem and several corporate giants would like to work with them. Integrating high growth and innovative tech startups within corporate ecosystems to aim for acquisitions are definitely on the rise. Corporate venture capital (CVC) focusing on innovative companies in the mobility ecosystem is now more prevalent and further engagement is anticipated in future. CBI insights data testifies that the top 3 mobile and telecom CVC deals took 70% of Q3 mobile CVC funding, which more than doubled Q213’s funding amount and marked the highest quarterly total since the start of 2012. On a year-over-year and sequential basis, CBI cited that mobile CVC deals increased 68% and 39%, respectively. This is also true for overall mobile VC funding.
As companies both large and small continue to emphasize the platform shift to mobile, CBI Insights confirm that VCs deployed $ 3.7 billion across an array of mobile industries in 2013. Early-stage investments dominated deal activity, but large mid-stage rounds gained funding share. In Q3 2013, VCs put in $ 1.12 billion across 150 deals into US mobile and telecom companies that turned out to be the highest funding quarter to the mobile sector ever. Even during Q4 2013, both quarterly deal and funding levels remained at or near historical highs. Mobile VCs invested in a variety of emerging mobile industries from payments, content and gaming to app development and security (see chart). Benedict Evans, a partner at Andreessen Horowitz says – “The whole mobile space is in flux – Apple and Android have won the platform wars, more or less, but all the dynamics on top of that are changing all the time.”
On the other hand, several major corporates are also in partnership with startup hubs and technology networks to organize hackathon challenges, startup competitions and other forms of durable association. There are definitely for more corporate outreach programs today in areas like mobile apps, mobile commerce, e-payments, wearables, IoTs, connected vehicles and mobile infrastructure with active engagement of SMB2.0. At SharePract, we believe SMB 2.0” engagement with mobility will set the stage for global transformation. The rise in the share of mobile workers worldwide to 45% with more coming from the developing economies is yet another trend to track to accurately project future growth. Access to mobile devices will exert great influence on how consumers and enterprises work. The line of divide between consumer and commercial devices gets blurred with BYOD catching on swiftly.
Steering through the fuzzy mobile ecosystem is not easy but it’s surely exciting with lot of action already underway. And the revenue channels are promising with significant growth prospects for software, services and cutting edge hardware. To get a feel of what is in store, the revenue generated from few areas like mobile transactions, smart home services and advertising spend are worth taking a look. The number of contactless transactions via mobile handsets will exceed 9.9 billion globally by 2018, up from 3 billion in 2014. Revenues from Smart Home services will reach $ 71 billion by 2018, up from $ 33 billion in 2013. At the same time, the advertising spends on mobile search and discovery will reach $ 16.8 billion by 2018 against $ 6.4 billion in 2013. Tracking the mobility ecosystem to find innovative solutions for the future could pay rich dividends to all those taking a pick. A spate of mergers, acquisitions and partnerships shall also dominate the scene. Corporate collaboration with SMB2.0 to intensify further. This calls for more collaborative networks like SharePract to trigger such strategic partnerships, community building and extensive cooperation.