Digital Lifescapes | by David H. Deans

Why the Buying-Cycle Starts and Ends Online

2009-07-11T18:39:00.007-05:00

Current business information has always been important to executives. In the past, they read newspapers and trade magazines for information on trends and developments. Not any more. Times have changed, and so has the source of buying-cycle influence.

According to the "Rise of the Digital C-Suite" study from Forbes Insights and Google, the Internet has become the most valuable information resource -- by far -- for U.S. executives.

Online ranked ahead of at-home and at-work contacts, personal networks, trade publications and outside consultants as an information resource. Newspapers and magazines trailed way behind.

When it comes to locating business information online, search engines were rated higher than other digital tools, such as blogs, social networking sites and subscription search services.

Although, ironically, the search results may lead executives to influential blog content that's typically ranked highly by Google and other search engines.

The most important type of information executives searched for online was competitor analysis (53 percent), followed by customer trends (41 percent), corporate developments (39 percent), technology trends (38 percent) and compliance and legal issues (26 percent).

Surprisingly, 53 percent of executives preferred to gather information themselves -- rather than delegate research tasks to lower level employees. Senior executives of all ages found the Internet to be a profoundly useful tool, according to the survey authors.

Online information sources will likely grow in importance, as executives under age 50 use new media tools more often than their older counterparts.

eMarketer, who reported on the results, says that C-suites will be transformed by this activity. I believe that Internet savvy executives will be more inclined to start and end their information discovery online, particularly in the process of procuring unfamiliar products or services.

Global Broadband Leaders Raise Bandwidth

2009-07-10T07:55:00.011-05:00

Market penetration of broadband access services continues globally, with total subscribers on track to reach 500+ million next year, according to a market study by Futuresource Consulting.

"More than 60 percent of all fixed broadband households on the planet are connecting using xDSL, where digital data transmission takes place over a local telephone network, while cable accounts for a little over 20 percent," says Patrik Pfandler, Senior Market Analyst, Futuresource Consulting.

Although markets in many developed countries are becoming saturated, alternative hot spots are starting to emerge -- Africa and the Middle East will experience spikes this year that equate to 33 percent growth.

Longer term, India is the country to watch. With one of the lowest household penetration rates for fixed broadband -- at just over 2 percent, or five million subscribers -- they're projected to grow five-fold by 2013, to almost 25 million access lines.

Asia-Pacific is still the global leader, with Japan and South Korea offering average download speeds of approximately 30Mb/s. Sweden leads Europe, averaging 14Mb/s last year. In the U.S., however, the national average achieved last year was just 2.7Mb/s.

"Download speeds are the next broadband battleground in developed countries," says Pfandler, "with network upgrades over the next four to five years providing a number of players with that much-needed edge in a commoditized market."

Cloud Services Enabling Mobile Applications

2009-07-09T07:14:00.001-05:00

The iPhone, from Apple, increased the market awareness of value-added service (VAS) mobile applications. These applications and associated "app stores" are becoming the next mobile sector market development opportunity.

However, most new mobile applications require smartphone capabilities, limiting their potential market. Moreover, a new architecture that applies a cloud-based model could drastically change the way mobile applications are developed, acquired, and consumed.

According to the market study from ABI Research, mobile cloud-based services will be disruptive and could eclipse the current mobile application model by 2014, delivering revenue of nearly $20 billion annually.

"Mobile application developers today face the challenge of multiple mobile operating systems," says ABI senior analyst Mark Beccue. "Either they must write for just one OS, or create many versions of the same application."

More sophisticated apps require significant processing power and memory in the handset. Using Web development, applications can run on hosted servers, so handset requirements can be greatly reduced and developers can create just one version.

The cloud-based trend is in its infancy today, but ABI Research believes that eventually it will become the prevailing model for mobile applications.

This approach is not without challenges. A cloud-based application stops working if you lose your radio connection. But, new programming languages such as HTML 5 will enable data caching on the handset, allowing work to continue until the wireless connection is restored.

"Cloud computing will bring unprecedented sophistication to mobile applications," Beccue notes.

Business users will benefit from collaboration and data sharing apps. Consumers will gain from remote access apps -- allowing them to monitor home security systems, PCs or DVRs.

That said, one lingering question remains. How will over-the-top cloud-based apps further impact mobile network operator's hopes to increase revenue? If the mobile service provider isn't the catalyst for open innovation, then the evolving ecosystem may relegate them to a lower status in the mobile VAS value-chain.

Hybrid IPTV Set-top Box Creates Opportunity

2009-07-08T23:47:00.004-05:00

The latest global market study by Multimedia Research Group (MRG) demonstrates how hybrid IPTV set-top boxes (STBs) are helping IPTV Operators accelerate early service deployment or extend the reach of their existing video IP Networks.

By merging existing digital video broadcast programming with IPTV services, Operators are finding they can significantly slash CapEx and lead-time costs from typical IPTV deployment costs.

In 2008, there were already 14.4 million installed hybrid STB units worldwide, with estimated growth to 22.3 million in 2012.

The MRG report explores how hybrid IPTV set-top boxes can receive broadcast digital channels from Satellite, Terrestrial or Cable—plus from a managed IPTV (on-demand) service.

By using existing broadcast sources in addition to on-demand IPTV service, IPTV Operators can significantly reduce the content acquisition and early network infrastructure requirements.

"Use of hybrids can solve some serious problems presented by technical restrictions or lack of content," says MRG Analyst, Huw Price-Stephens, MRG Analyst. "They can also create new and bigger problems unless acquired with an effective exit strategy, which does not require swapping out the STBs."

Matching a hybrid strategy with the local competitive profile may be the best way for an IPTV Operator to differentiate the service.

Moreover, the growing threat of compelling Over the Top (OTT) video offerings will motivate IPTV service providers to act sooner, rather than later.

New Approach to Digital Rights Management

2009-07-07T23:29:00.006-05:00

Copy protection, watermarks, digital fingerprinting, and conditional access are all Digital Rights Management (DRM) technologies used with the intent to enforce copyright protection of video content. However, the problem is, typically they don't.

Apparently, efforts to stop the reported 12 billion peer-to-peer (P2P) downloads occurring annually in the U.S. have come up short, according to the latest market study by In-Stat.

In-Stat believes content owners and service providers need to shift from content protection to a two-pronged content monetization strategy consisting of digital rights information management and offering a better user experience than consumer P2P services.

"What is needed is a new approach to monetizing digital content including moving a relatively small group of consumer households that do the bulk of P2P downloading (power users), to legal services," says Keith Nissen, In-Stat analyst.

The question is whether the big media companies in the video industry wishes to control its own destiny, or get crushed by technological change, similar to what is occurring in the record labels within the music business.

In-Stat's market study found the following:

- U.S. broadband households download 14 billion videos copies each year; 85 percent are not licensed.

- In-Stat sees watermarking becoming a growing technology to track licensed usage rights.

- A migration of power user households from P2P to legal video services would potentially generate $1.4 billion in subscription revenue and $1.1 billion in advertising revenue.

Smartphone Content and Service Experience

2009-07-06T18:07:00.005-05:00

The consumer demand for smartphones is growing rapidly and will push annual sales worldwide from 131 million units in 2008 to over 300 million by 2013, according to the latest market study by Parks Associates.

The assessment finds people are attracted to these converged devices because they combine applications into a mobile platform, which can then be expanded incrementally -- with new and unique add-ons and applications.

"Consumers have a personal connection to their mobile phones," said Harry Wang , Director, Health and Mobile Product Research, Parks Associates.

Applications like T-Mobile's Sherpa will learn from its user's preferences in order to make personalized, location-based recommendations on restaurants and shops. The latest iPhone release is also making a strong case for mobile video.

Smartphone users worldwide will top 1.1 billion in 2013, creating a lucrative market for mobile service providers and mobile phone application developers.

"The success of the iPhone, Pre, and Blackberry shows the strength of consumer demand for an intelligent, multi-functional device," Wang said.

The appeal of the smartphone will create significant new revenue streams for carriers and developers, who could create new service bundles that build off this mobile platform with converged video, voice, and data applications.

Apparently, they're launching a new consumer study to explore smartphone service and application usage patterns, handset feature and function requirements, and customer expectations for the mobile content and service experience.

Why Downturns Create Upsides for Creativity

2009-07-04T07:40:00.010-05:00

According to the latest survey from Reardon Smith Whittaker (RSW), the economy has had a negative effect on the business of 87 percent of U.S. advertising and PR agencies -- and 91 percent of their clients.

Could this actually be a good thing for Digital Marketing professionals?

In the first half of 2009, 55 percent of clients had spending decreases of 6 percent or more. In addition, 35 percent expect to see marketing spending fall by 6 percent or more in the second half of the year.

Fifty percent of agency clients spent more on e-mail marketing than the previous year. Almost one-third of clients increased their commitment to search engine optimization (SEO), while 56 percent and 28 percent did the same for social media and online display, respectively.

"If you don't have a good grasp of new media, you had better get on it," recommended RSW analysts in their report of the apparent survey results.

Creative talent and business savvy is in demand, regardless of the current economy. The main reasons clients left agencies were lack of fresh ideas (73 percent) and the need to cut costs (44 percent).

I believe that the pressure to cut marketing budgets is always a wonderful thing -- because it creates opportunity for people truly skilled in doing more with less.

Big traditional advertising budgets, applied by inept executive leadership and habitually lazy marketing staff -- that are incapable of customer experience design experimentation -- are a proven recipe for a prolonged competitive disadvantage.

The minority of marketers that dare to move beyond their current comfort zone will do more than merely survive the downturn, they will thrive in the eventual upturn.

Latin America 3G Mobile Phone Data Service

2009-07-03T19:42:00.008-05:00

Latin American mobile operators are promoting new data services in order to offset falling voice revenues and satisfy the growing demand for value-added products. That helped make 2008 the year of 3G in Latin America, where virtually every Latin American mobile operator launched 3G services.

There were more than 6.8 million active WCDMA connections across Latin America at end March 2009, up 50 percent in just one quarter. Possibly the most striking growth of all has been in Brazil, where there were 3.8 million WCDMA subscriptions at end-March 2009, up from 2.2 million three months earlier.

"We can expect that number to continue to accelerate, because America Movil has made it clear that its investment priority in the region for 2009 concerns its 3G network," said Eva Benguigui, Senior Research Analyst at Informa.

Informa expects investments in 3G networks will accelerate across Latin America. For instance, there will be more than 15 million WCDMA subscriptions in Latin America at end-2009 -- or less than 3 percent of the total 522 million mobile subscriptions in the region.

However, WCDMA subscriptions will grow to 320 million at end 2014, or 46 percent of the region's 689 million total mobile subscriptions at that time.

"As more high-speed mobile networks are deployed and customers gain access to a wider variety of compatible devices, value-added data services will become increasingly important to mobile operator bottom lines," said Tammy Parker, principal analyst at Informa Telecoms & Media.

While the region's operators are focused primarily on 3G today, mobile broadband technologies such as HSPA, HSPA+ and LTE will be on their technology migration paths as they continue to expand next-generation services in order to offset falling voice revenues with higher data revenues.

However, LTE deployments in Latin America are expected to be a challenge since spectrum is congested in many areas. In Latin America, spectrum caps on operators and an overall lack of suitable spectrum for wireless broadband threatens to hold back mobile broadband deployment in some markets.

Nonetheless, operators across the Americas are expected to continue aggressively rolling out mobile broadband networks over the coming years where they have adequate spectrum availability, graduating from today's 3G and 3.5G networks to faster offerings promised by LTE and, in some cases, WiMAX.

Upside and Downside for Broadband Growth

2009-07-02T19:06:00.000-05:00

According to Point Topic's latest market assessment, by the end of Q1 2009 there were 429.2 million broadband subscribers worldwide. This represented a 4.02 percent increase on Q4 2008 when the total was 412.6 million.

The largest number of net additions was in Q1 2007 when 19.6 million new subscribers signed up for broadband services.

Despite the recent dips in Q2 2008 and Q4 2008, the lowest number of net additions in the period shown was in Q2 2006 at 14.5 million. This was almost 14 percent less than the net additions acquired in Q1 2009 which totaled 16.6 million.

Over the 12 months to end Q1 2009, 63.5 million new broadband subscribers were added worldwide, representing 14.8 percent of total subscribers by end-Q1 2009. Global broadband population penetration was 7.4 percent by the end of Q1 2009, up 17.4 percent on the same time a year ago from 6.3 percent and up 4.2 percent on the previous quarter from 7.1 percent.

Global household penetration was 27.3 percent, up 17.7 percent from 23.3 percent in Q1 2008 and up 4.2 percent from 26.2 percent in Q4 2008.

Western Europe and South and East Asia have the largest shares of the world broadband market at 25.18 percent and 23.07 percent respectively. These were followed by North America with a 21.79 per ent share and Asia Pacific with 15 percent of the market.

The three smallest shares of the broadband market are in Latin America (6.5 percent), Eastern Europe (5 percent) and Middle East and Africa (2.94 percent).

The regions with the most mature and advanced broadband markets had the lowest growth rates during Q1 2009. They were North America (3.87 percent), Western Europe (2.63 percent) and Asia Pacific (1.83 percent). Growth was relatively low in these regions due to little potential for new growth.

Demand for Lower Price Digital Photo Frames

2009-07-01T18:20:00.002-05:00

The market for digital photo frames has gone mainstream, particularly since prices dropped to affordable levels in the first half of 2009, according to the latest market study by In-Stat.

However, most units shipped still lack advanced features such as wireless connectivity to the Internet. Nevertheless, Wi-Fi enabled photo frames are a key growth driver as they will grow at twice the rate of overall digital photo frames in 2010.

"Prices for connected frames will continue to decline, and as manufacturers educate consumers about these devices -- the mass market will become more comfortable using the Internet services connected frames support," says Stephanie Ethier, In-Stat analyst.

Applications such as sharing and downloading pictures over the Internet, as well as streaming Internet radio and video from online sites like YouTube, are also expected to be primary drivers.

In-Stat's market study found the following:

- Worldwide unit shipments of all digital photo frames are expected to reach 50 million by 2013.

- Nearly 60 percent of U.S. respondents to In-Stat's consumer survey identified integrated wireless connectivity as a desired feature on their next digital photo frame purchase.

- The total silicon opportunity for digital photo frame suppliers will exceed $550 million by 2013. Microcontrollers comprise the largest opportunity in non-wireless enabled devices.

- The bill of materials for a wireless 8-inch digital photo frame will fall below $36 by 2013; the LCD, the wireless module and the enclosure are the dominant cost items.

Recession-Proof Mobile Phone Services

2009-06-30T04:41:00.003-05:00

Due to the global economic crisis, there's been a recalibration of consumer purchasing and usage behaviors which will affect all industries -- including the normally recession-proof mobile phone services industry.

Yet despite these market uncertainties, a new ABI Research study shows that even under the worst recovery scenarios, mobile services revenues will continue to grow at nearly 1.2 percent through 2014 -- a 0.5 percent loss over pre-crisis conditions.

According to ABI practice director Dan Shey, "A long economic recovery places pressures on mobile operators to compete on price, particularly with undifferentiated voice services. Mobile data services allow operators to counter that pressure. However each region is different."

Operators should create strategies that lead customers to maintain nice-to-have data services or encourage addition of more utilitarian ones.

Economically, North America has been hit hardest. But mobile data services growth will exceed 8 percent through 2014 even in the worst recovery scenario and will shield mobile services revenues against growing voice pricing pressures.

While stimulus packages are helping power the Asia-Pacific region through the financial crisis and limiting unemployment loss, regional operators derive a large portion of their data revenues from content downloads.

These products would be the first casualties of an extended recession, particularly with APAC's substantial prepay base. But operators can mitigate the impacts of the depressed conditions through appropriate messaging and offer management.

According to Shey, "Mobile operators need to stress the utility of mobile services and pursue appropriate services personalization initiatives that allow customers to buy and use services in ways that best suit their needs."

Business customers should also be a target segment as businesses consider mobile a way to lower communications cost and increase competitiveness.

Mobile Data Usage Drives Network Backhaul

2009-06-29T04:15:00.005-05:00

The demand for more mobile network backhaul capacity will grow three fold between 2009 and 2013, according to a recent market study by In-Stat.

Mobile network operators are deploying EV-DO 2000, HSPA/HSPA+, WiMAX, and LTE to meet the growing demand for high-speed mobile data. In the process, the bottleneck affect of cell site network backhaul has become more prominent.

Traditionally, voice has dominated the traffic going across a mobile operator's network. With voice as the primary traffic component, an operator could meet its backhaul requirements with a couple of T-1 lines per base station.

That has all changed with operators relying on data for revenue growth.

"Cellular and WiMAX backhaul provides that crucial link between the mobile operator's radio access network and its core network," says Frank Dickson, In-Stat's VP of Mobile Internet research.

"It does an operator no good to install a base station with 7.2 Mbps capacity if the backhaul is limited to 4.5 Mbps."

In-Stat's market study includes the following highlights:

- WiMAX and LTE will require backhaul needs of 80-100 Mbps. Their deployments will increase the need for new backhaul solutions.

- While microwave will remain the most common last mile link medium, Ethernet is playing an increasing role in supporting backhaul needs for cellular and WiMAX networks.

- 90,000 Gbps of capacity in the last mile of the backhaul network will be needed by the end of 2013 to support the worlds cellular and WiMAX networks.

- In Asia/Pacific, the cellular backhaul last mile backhaul capacity for LTE will be 2,500 Gbps in 2013.

Why Digital Distribution Rocks Entertainment

2009-06-27T19:24:00.006-05:00

Change is the name of the game for the entertainment industry. Don't like the new reality? Too bad, because there's more to come. Music, movies and video games are facing economic challenges due to the disruptive influences of digital distribution.

"The music industry was knocked off balance by the emergence of the MP3 in the late 1990s and has not recovered, and Hollywood's two core businesses, box-office receipts and DVD sales/rentals, have stopped growing," says Paul Verna, eMarketer senior analyst.

While the sales of video game consoles and software titles remain relatively strong, the industry's future is shifting to digital distribution and ad-supported models.

Spending on CDs and other physical sound carriers dwindled to $5.8 billion in 2008 -- down a very significant 60 percent from a peak of $14.6 billion in 1999. In 2009, the U.S. recording industry will mark 10 consecutive years of declining CD sales.

U.S. sales of recorded music will drop to $5.52 billion in 2013. This downward trajectory will extend a pattern that began in 2000, when physical sales started to decline after rising dramatically during the rise of the CD.

"Online will experience healthy growth, mobile will trend slightly downward and physical will continue to plummet at accelerating rates," says Mr. Verna. "Unfortunately, the sum of online and mobile will not compensate for losses in physical, but it will slow down the rate of those losses to a 2.9 percent drop in 2013."

In 2008, single downloads made up the bulk of digital music sales, over $1 billion -- ironically, that's the revenue stream that initially the recording industry attempted to terminate in a very public battle with their primary consumers.

An NPD Group survey revealed a nexus between music and social media, finding that the percentage of U.S. teens who downloaded (for a fee) or listened to music via social networks increased from 26 percent in 2007 to 46 percent in 2008.

"Clearly, this is a period of experimentation for the music business and social media," says Mr. Verna. "The next step for these services will be to broaden their offerings into a user experience that straddles platforms and devices."

Digital TV Free Entertainment Consumption

2009-06-26T13:35:00.008-05:00

Futuresource Consulting is studying how consumers interact with and consume digital entertainment, whether via the TV, online or mobile.

For the first wave, online surveys were carried out in the UK, France, Germany and the USA with more than 2,500 respondents -- focusing on in-home connectivity and online content consumption.

"This tranche of research has provided key insights into consumer behavior across four major territories, allowing us to compare and contrast viewing habits on a country-by-country basis," says Alison Casey, Head of Global Content at Futuresource.

The study shows that nearly 90 percent of Pay-TV subscribers in France who make additional payments to their provider are doing so for movie titles, and there are substantial differences between countries.

German Pay-TV subscribers came out on top for making additional payments for sport and TV shows, with France (sport) and the UK (TV shows) ranking last.

In the UK, Pay-TV subscribers are adopting free on-demand and catch-up video delivered to their TV. Eighty percent of respondents whose package offered this service used it, with the impact of the BBC iPlayer clearly shown in the research.

When Futuresource asked respondents whether they ever watch TV, movies and video on their PC or laptop, two thirds of people in the UK replied either often or sometimes, with consumers in the U.S. not far behind.

But when they asked people if they connected a laptop directly into a TV to watch video from the internet, the results were inverted, with Germany leading the field, closely followed by France.

And, of those who have never connected a laptop to a TV, many didn't know how to -- or had never thought about doing it. Image the upside potential for OTT video when online viewing via a TV becomes a mainstream activity.

Across all territories surveyed, of those who watched streamed or downloaded video content online around 90 percent have never paid for news content or recently-missed TV shows, gradually sliding down to just over half that have never paid to watch new movies.

However, the survey showed that of those who have never paid, more than half answered yes or maybe when asked whether they would be "willing" to pay in the future. All respondents were also likely to pay, or pay more often, if they were offered online content in HD -- or if they could keep the downloaded or streamed content.

There is a huge appetite for free on-demand TV, and yet adoption of paid content is still low. The propagation of new business models is likely key to market development, with video site location, navigation and meta tagging still causing major problems for consumers.

Advertising on Mobile Phones Seeks a Market

2009-06-25T13:12:00.004-05:00

Revenues for mobile advertising (on cell phones) in the U.S. and Canada will grow from $208 million in 2009 to approximately $1.5 billion by 2013, according to the latest market study by Parks Associates.

Adoption of smartphones, 3G network data plans -- or newer wireless services -- and downloadable applications will spur this growth in ad revenues, with significant increases beginning in 2010.

Parks Associates estimates there were 62 million smartphone users in North America in 2008, with user penetration to reach 239 million in 2013.

Parks Associates projects U.S. 3G network data plans will reach 95 percent penetration by 2013, with Canada achieving 70 percent penetration.

"Mobile advertising is poised to take advantage of opportunities presented by the diffusion of 3G networks and devices such as the smartphone," said Heather Way, research analyst, Parks Associates.

Advertisers will begin to incorporate the mobile format into their media campaigns as this medium matures into a viable marketing space.

However, unlike the Asia-Pacific and European markets, where enhanced mobile phone usage is commonplace, I believe that the North American market is still in the early-adopter stage of market development.

Ms. Way also cautions that advertisers could encounter early resistance from consumers. The Parks market study found 38 percent of respondents do not want to receive mobile ads, while 37 percent remain neutral to the idea of ads on their mobile phone.

"However, teens and young adults are more receptive to ad-supported mobile content, particularly in entertainment genres," Ms. Way said. "Advertisers need to develop innovative ways to reach these consumers."

Cable Broadband Market Resists Downside

2009-06-24T21:06:00.006-05:00

Infonetics Research released the results of the first quarter (1Q09) edition of its Cable Broadband Aggregation Hardware and Subscribers market study.

"On the heels of record-high revenue in 2008 ($1.23 billion), the cable broadband hardware market held steady in the first quarter of 2009, while the cable CPE segment dropped," said Jeff Heynen, Infonetics Research's Directing Analyst for Broadband and Video.

This first quarter slowdown points to a challenging 2009, in which an ailing economy and aggressive telco competition will make adding new broadband subscribers difficult.

Still, compared to the overall downturn in telecom equipment spending in 1Q09, the cable broadband market was somewhat of a bright spot, and proves that cable operators remain committed to expanding their DOCSIS 3.0 footprint -- transitioning from T-CMTS and I-CMTS to M-CMTS architectures, and introducing hybrid IP/QAM video services to support tru2way and DVB-MHP services.

Highlights of the market study include:

- Worldwide cable broadband hardware (CMTS, universal edge QAMs) revenue held steady in 1Q09 from 4Q08, down just 0.2 percent.

- CMTS sales actually inched up a bit (0.9 percent) in 1Q09 from 4Q08.

- Operators are expected to take as much of a break as they can in 2009 to digest all the downstream capacity they deployed in 2008, and also to be more strategic with their DOCSIS 3.0 related rollouts.

- Although Cisco leads the overall worldwide market, ARRIS extended its key revenue share lead in the pivotal North American market by nearly 7 percentage points.

Rural Consumers Drive Mobile Phone Growth

2009-06-23T20:43:00.005-05:00

Annual mobile service revenues in the Asia Pacific region will increase by more than 16 percent from 2009 to $326.37 billion by end-2013 -- with growth driven by the continuing rise in mobile subscriptions and greater usage of data services.

Informa's latest market study forecasts that the region's total subscriptions base will increase by over 500 million, or almost 25 percent, from 2.03 billion at end-2009 to 2.53 billion at end-2013.

"The robust growth will be spurred in particular by immense expansion in China and India, and also higher-than-expected subscription increases in developing markets such as Indonesia, the Philippines and Vietnam," said Nicole McCormick, senior analyst at Informa Telecoms & Media.

Prepaid connections will continue to be the primary tariff option with the number of prepaid users rising from 1.52 billion in 2009 to 1.97 billion by 2013, accounting for approximately 90 percent of total net additions.

As a result, prepaid penetration in the regional will rise from 74.8 percent in 2009 to 77.7 percent in 2013.

"Continued growth is being prompted in most markets by operator expansion into rural regions, as mobile take-up in large cities reaches full saturation," says McCormick. She adds that leading operators in China and India already claim that more than 50 percent of their quarterly net additions now come from rural customers.

However, with subscriptions growth being driven by low-income segments, ARPU is also being adversely affected. Informa forecasts that blended ARPU across the region will fall from $12.33 in 2009 to $10.88 in 2013.

At the same time, however, the region is fast becoming a powerhouse of wireless-broadband take-up, with cheap HSPA services helping to fuel both the growth in subscriptions and in revenues.

As voice revenues level off, and actually decline towards the end of the period, data revenues are forecast to rise from 30 percent of total revenues in 2009 to 38 percent by end-2013.

Overall penetration will rise from 53.4 percent end-2009 to 64 percent end-2013, while actual subscriber penetration increasing from 42.9 to 51.2 percent over the same period.

The difference in subscriber versus subscription penetration shows the importance of multi-SIM ownership, with each subscriber owning, on average, 1.24 SIMs in 2009 and 1.25 SIMs in 2013.

Upside for Airline Passenger Entertainment

2009-06-22T20:21:00.004-05:00

Video is a high growth market segment. Live broadcast video is poised for significant growth in 2009, according to the latest market study by In-Stat.

While this service is more established than in-flight broadband, usage revenues are still anticipated to nearly double in 2009 to reach almost a quarter of a billion dollars, nearly five times the size of the in-flight broadband market.

However, the compelling demand for Wi-Fi connectivity among airline passengers drives higher growth for in-flight broadband. By 2011, in-flight broadband service revenue will exceed that of direct video broadcast, with in-flight broadband revenues of $761 million.

"The airline industry is desperately trying to better monetize its cabins," according to Frank Dickson, In-Stat Vice President of Research.

"Direct video broadcast services and in-flight broadband services are two compelling ways that provide passengers with a better customer experience while allowing the airline industry to add incremental revenue. It is a true win/win."

In-Stat's market study found the following:

- The majority of direct video broadcast deployments belong to LiveTV, with Panasonic being their largest competitor.

- In-Stat expects that, in later forecast years, IPTV will contribute a portion of in-flight video revenues.

- The number of broadband enabled airplanes will increase from 25 in 2008 to 800 in 2009.

- Airline passengers will generate over $47 million worldwide in 2009. In-flight broadband equipment revenue will nearly double between 2009 and 2013.

- In-Stat forecasts over 200 million annual in-flight broadband connects by 2013, with long-haul connects dominating over short-haul connects.

Marketers Adopt SEO, Microsite Sponsorship

2009-06-20T15:52:00.006-05:00

eMarketer posed the question, what's the best way to generate sales online? While the answer may vary depending on the size of your budget, a Forbes study says marketers of all sizes should start with search.

Forty-eight percent of marketers overall said that search engine optimization (SEO) was the "best method" for generating conversions online. More than one-half of marketers with budgets over $1 million agreed.

The next most effective conversion tactic for smaller marketers was e-mail and e-newsletters, followed by pay-per-click and search ads, behavioral targeting and page sponsorships.

For larger marketers, the list of effective online tactics was nearly the same, except search and e-mail were flipped. Pay-per-impression ads were also more effective for larger marketers.

To build, maintain or change brand perceptions required different tactics, however.

For both small- and large-budget marketers, site or page sponsorship and SEO were considered the most effective ways to build a brand online.

Pay-per-impression ads came next on the list for big spenders, while the more budget-constricted focused on e-mail newsletters, pay-per-impression and viral marketing.

Perhaps in anticipation of the end of the recession, marketers are changing their spending priorities in the six months after March 2009 to feature more viral marketing, SEO, behavioral targeting and pay-per-click.

Overall, 57 percent of respondents said they still spend less than 25 percent of their marketing budgets online -- regardless of the fact that online is proven to be more effective.

Note, I've re-launched the GeoActive Microsite Network, to provide new sponsorship opportunities for marketers in the Technology | Media | Telecom sector who seek a targeted site.

PC Usage in APAC Drives the Market Upside

2009-06-19T08:46:00.009-05:00

Worldwide PC shipments fell 6.8 percent in the first quarter of 2009 (1Q09), about 1.4 percent better than expected but still the largest decrease since the third quarter of 2001, according to the latest market study by IDC.

Although volume declined less than expected -- thanks to some positive activity in the latter part of the quarter -- the Commercial sector and key macroeconomics indicators remain weak.

The growth of Mini Notebook PCs is playing a dramatic role in the market. Mini Notebook PC shipments of 5.7 million in 1Q09 were ahead of expectations, but contributed to a decline of 3.1 million traditional notebooks from a year ago.

The impact on shipment value was dramatic, with Mini Notebook PCs contributing $2.2 billion in the first quarter of 2009 while the value of traditional notebook shipments declined by $8.4 billion from a year ago.

Mini Notebook pricing is expected to rise with more robust models, and shipment growth is expected to slow with the release of low-cost, thin-and-light Intel CULV and AMD Congo-based systems this fall. However, the growth of Mini Notebooks to 9.5 percent of total PC shipments (17.3 percent of Portables) in 2009 will help drive shipment value down by 17.7 percent even as volumes decline just 3.2 percent.

Mature markets saw growth drop significantly in the past two quarters, but are expected to stabilize and improve going forward. The United States and Western Europe outperformed forecasts as consumer demand was supported by strong ASP declines that were accelerated by growth in Mini Notebook PCs.

Although 1Q09 was promising, shipments in the United States are still expected to decline by just over 2 percent in 2009 and see less than 1 percent growth in 2010.

Western Europe saw a limited impact in 4Q08, but saw growth disappear in the first quarter and is likely to see further contraction in 2Q09 before stabilizing -- putting 2009 growth slightly below zero while double-digit growth will not return until 2011. Projections for Japan were lowered as 1Q09 activity missed expectations, though we continue to expect low-single digit growth in 2010-2011.

Continuing the trend from the fourth quarter of 2008, emerging markets continue to account for the most dramatic shipment declines. Lack of credit along with continued currency devaluation continued a cycle of shrinking resources for channel financing that severely affected Latin America and Central/Eastern Europe.

Canada, along with Latin America and CEMA combined are expecting 2009 to see a decline of more than 13 percent although the region will see double-digit growth in 2010 as it rebounds from 2009.

In contrast to other emerging regions, Asia/Pacific excluding Japan (APeJ) came in slightly above forecast as government spending funneled money to infrastructure improvements and vouchers to stimulate consumer spending.

China in particular fared better than hoped. For the rest of 2009 PC growth should accelerate in APeJ, reaching near 12 percent for 2010, and leading other regions through the end of the forecast.

Consumers Resist Upgrading Mobile Phones

2009-06-18T07:57:00.007-05:00

The worldwide mobile phone market shipped 35 million fewer units than it did during the same period in 2008, and all indications point to that trend continuing throughout 2009.

The mobile phone industry has long been characterized by its seasonal trends, where the first quarter always delivers a sequential decline after a busy holiday season. However, the drop in this first quarter was especially sharp, according to ABI Research practice director Kevin Burden.

"The 255.6 million handsets shipped represented a 20 percent decline from Q4 2008, which was already a down quarter, and a nearly 12 percent decline from Q1 2008."

Shipment reductions are a new reality for the mobile phone market. "The industry and consumers have gone into protection mode," says Burden. "Protecting profitability has led handset manufacturers to produce less and to operators and retail outlets holding smaller inventories."

Consumers are also realizing that many of the features they desire are already in the handset they currently use, and are willing to forego an upgrade until they have more confidence in their own futures.

The Asia/Pacific region, with handset volumes triple that of the next largest region, had been widely expected to feel more than a fair share of pain due its very troubled economic conditions.

However it posted only an 8 percent YoY decline, which was a spot of encouragement. The Latin American market, however, tempered any encouraging news with a reminder of how deeply the recession can cut.

The region had a nearly 28 percent decline in shipments, the largest decline of any region, due in large part to the devaluation of its currencies leading to higher prices of imported mobile phones.

Americans Adopt Pre-Paid Mobile Phones

2009-06-17T18:40:00.001-05:00

comScore released a quarterly review of the U. S. prepaid wireless industry based on online visitation and online search referral activity to six leading prepaid wireless sites.

The study showed strong gains in online activity as consumers increasingly use keyword searches t0 turn to cost-effective wireless service alternatives during the current economic downturn.

The combined visitation to these sites grew 37 percent versus year ago to nearly 8 million visitors, representing more than 4 percent of the total U.S. Internet audience.

Growth in the category was driven primarily by MyCricket.com (up 107 percent) and Boostmobile.com (up 105 percent), both of which more than doubled in visitation versus year ago. MetroPCS.com and Net10.com also experienced strong gains, growing 63 percent and 37 percent, respectively.

Although the marketing messages of most prepaid wireless providers target the youth market, prepaid wireless site visitation data suggest considerable interest in the plans among 35-64 year olds.

In fact, the majority of visitors to Net10.com (60.3 percent) and TracFone.com (58.7 percent) were from this older age segment. Even for sites where the majority of visitors were under 35 years of age, such as Boostmobile.com and MetroPCS.com, 35- 64 year olds still comprised at least 40 percent of visitors to the site.

While it is likely that some of this older skew can be attributed to parents purchasing phones on behalf of their children, the data nevertheless underscore the appeal of prepaid wireless beyond the youth market.

In order to understand the marketing factors driving traffic to prepaid wireless sites, comScore also conducted an analysis of search referral activity. The results showed that while both paid and organic search are driving increased referral activity, organic search is substantially outpacing paid search referrals on the whole.

IPTV Operators Adopt OTT for Differentiation

2009-06-16T10:03:00.007-05:00

According to the latest market study by MRG, 2008 IPTV subscribers reached 1 million over its last forecast in late 2008, or 21.3 million, resulting in projected subscriber growth of 26.9 million in 2009 to over 81 million in 2013.

Systems vendor combined CapEx revenue plus service revenue will grow from $9.7 billion in 2009 to $25.6 billion in 2013.

Their new IPTV forecast for 2009-2013 is based on very detailed semi-annual analysis that MRG does on individual Service Providers and on a country-by-country basis -- including six IPTV CapEx products broken into 4 regions.

"The relatively strong market in 2008 caused CapEx transactions to flourish through the end of 2008," says Jose Alvear, MRG Analyst.

That anticipatory wave of orders kept vendor pipelines full all the way through 2008, but in Q1/2009, many IPTV vendors reported single-digit reduction in revenues, which is reflected in our flattened 2009 forecast.

One indicator that new subscriptions will remain strong is the Q1/2009 IPTV subscriber growth of 583,000 combined for U.S. Verizon and AT&T compared with 114k new subs added by the two largest U.S. Cable Operators, Comcast and Time Warner for the same period.

Also a signal of new growth is the number of new IPTV Operators in Eastern Europe and the Rest-of-World (ROW) region. The number of Service Providers in the ROW category went up from 64 companies to 84.

Countries like Colombia, Qatar, United Arab Emirates, Montenegro and the Russian federation have seen new growth in their operations, and, the ROW region will be among the fastest-growing market from 2009 to 2013 with a 29 percent CAGR.

As the IPTV market matures, many innovations are emerging, including Service Providers turning to Over-the-Top (OTT) Video applications to supplement their video-on-demand offerings.

Technical upgrades also contribute to growth, including DVRs, High-definition programming, MPEG-4/H.264, and first class system integration. Professional services growth is brought on by stronger regional partnerships of vendors and resellers that continue to move into smaller markets.

Growth in System Integration and Professional Services will also be spurred by the growth of turnkey system sales where all the components are heavily pre-integrated.

Video Game Consoles Enable OTT Adoption

2009-06-15T08:14:00.001-05:00

The range of connected consumer electronics devices delivering over-the-top (OTT) video into the living room is growing. Device types include digital media adapters (DMAs), pay-TV set top boxes, Blu-ray player or recorders, HDTVs and media-center PCs.

However, networked video game consoles are currently the most utilized devices for bringing web video to the TV -- and will remain so through 2013. By 2013, over 10.7 million consoles will be used as Web-to-TV mediation devices in the U.S., according the the latest In-Stat market study.

While still at the early adoption stages, the impact of bringing web video to the TV will bring both opportunity and threats to a range of companies in the traditional electronics and TV markets. By 2013, the revenue from Web-to-TV streaming services will grow to $2.9 billion.

"Currently Web video is largely additive to traditional TV revenue streams," says Keith Nissen, In-Stat analyst. "However, ultimately web video to the TV will force a complete restructuring of today's video distribution ecosystem."

Service provider decision makers that are responsible for approving an additional investment in IPTV infrastructure therefore need to reconsider their prior market development strategy, in light of this growing trend.

In-Stat's market study found the following:

- Two separate in-home content delivery networks (CDNs) are evolving in the digital home -- one for broadcast media services (e.g., cable TV), the other for Internet-based broadband services.

- Within five years, the number of U.S. broadband households viewing Web-to-TV content will grow to 24 million.

- Already, 29 percent of U.S. 25 to 34 year olds with game consoles use the devices to watch streaming video off the Internet.

- Video content will be optimized for broadcast or Web-to-TV based on content type.

Why Online Video Sharing is a Social Media

2009-06-13T06:37:00.001-05:00

eMarketer reports that a few short years ago, the term "online video" had a different meaning. Clips were downloaded very slowly, and had to be viewed in tiny windows. Sound and graphics were primitive. Clearly, it wasn't a popular media.

But, then came YouTube in the U.S., Dailymotion in Europe and Tudou in China -- video-sharing sites that all had three basic elements in common:

Flash Player technology that enabled instant viewing in the browser, without downloading. Upload capability that made file-sharing with friends, as well as viewers around the world, quick and easy. Embedding code that allowed users to post video clips on their Web pages and blogs.

Suddenly video was an open, consumer-driven platform, with virtually no cost of entry. As a result, online video moved from niche to mainstream, and in the process became one of the fastest-growing media platforms in history.

According to The Global Web Index from Trendstream, with research conducted by Lightspeed Research, early this year 72 percent of U.S. Internet users watched video clips monthly -- making video bigger than blogging or social networking.

According to the survey, 62 percent of U.S. Internet users watched at least one clip a week, a figure that Lightspeed analysts translated into 97 million weekly viewers. By contrast, Nielsen Online pegged the number of U.S. online video viewers in April at nearly 117 million.

That scale of usage would mean online video in the U.S. is now as pervasive as network television.

The age of online video viewers trends younger: 82 percent of teens (16-to-17-year-olds) and young adults (18 to 24) streamed video, compared with 73 percent of Generation X (25 to 34) and 65 percent of older boomers (55 to 64) who said they watched.

Online video-sharing was less common, with only 46 percent of users participating. While teen, young adult and Gen X sharing percentages hovered around 50 percent, the older the Internet users, the less likely they were to send links to videos.

One-half of all respondents shared videos via e-mail to friends and family. Twenty-three percent sent video out to friends on social networks, 21 percent by instant messenger and 14 percent to their friends on video-sharing sites such as YouTube and Hulu.

The most widely used platform for discovering and viewing video online was YouTube, followed by e-mail, music sites, Yahoo! and news sites. Sharing appears to happen mainly among close friends, as 72 percent of video-sharers sent to just one, two or three people. Video sharing is clearly becoming the ultimate social media.