Mobile World Congress Report from Barcelona

Mobile World Congress (MWC) 2009 (aka 3GSM) was held for the fourth time in Barcelona, Spain, during February 16-19, 2009.

How is the industry doing? According to announcements, we have just crossed the 4 Billion mobile users mark! Also, it was reported that 80% of the world's population areas are covered with mobile / cellular services. This is definitely a great achievement for the industry. However, it also means that we have about 2 Billion potential users out there around the globe, and various socio-economic initiatives are underway to bring mobile communication and Internet services to all these regions.

How to count attendance? Organizers claimed that the attendance levels were similar to last year in terms of people (around 59,000); however, while previously most people stayed for the entire 3-4 days, this year they probably stayed only 1-2 days. Thus the attendance felt lower than last year. It also felt like less people, less hype, and more efficient meetings :-) Also, given the global economic conditions, it was heartening to see the crowds, and strong participation by numerous companies from around the world. I believe it is very likely that the mobile sector will out-perform most of the other sectors of the industry, and in fact can help kick-start the recovery :-)

Major Themes? The major themes (hypes?) of the Congress were the developments around the LTE & HSPA / HSPA+ infrastructure, the Green strategy of the industry, 3D, touch-screen and solar powered handsets, Android developments, Apps and App Stores, Mobile Advertising, Location Based Services, Video applications, and Social Networking. Let's look at each of these areas.

Is LTE Infrastructure ready for roll-out? Verizon, as expected, announced their LTE suppliers, with the lion's share going to Alcatel-Lucent and Ericsson. Even though Verizon insists on some deployments in 2009, it looks like it will be mainly for fixed access. Together with Verizon, Vodafone and China Mobile seem to lead the LTE drive around the world, but generally more cautious with large-scale deployment dates. Vodafone is looking at 2010-2012, while AT&T was quoted as targeting mid 2010 to have the key components in place. We believe that CAPEX limitations will push LTE deployments out further. T-Mobile had LTE demonstration with Nortel and LG equipment in Barcelona, connecting them to Germany, and showing video streaming applications. In fact, LG claims first LTE data card demonstrations. Also, Huawei claimed the first commercial contract for LTE in the world. Testing suppliers are also ramping up with LTE drive test systems, such as from Agilent, and others. Orange, T-Mobile and other European operators are all looking at 2011 as the timeframe for serious roll-out of LTE. At the same time, ABI Research was quoted as predicting that by 2013, operators around the world will spend $8.6 Billion on LTE base-station infrastructure.

HSPA is where the money is! Even though there has been lots of hype around LTE, HSPA is and will continue to be the major revenue focus for suppliers. Interestingly, according to In-Stat, Huawei has secured 42 new UMTS / HSPA contracts in 2008, representing 40% of the market-share. Does this mean other (mostly European) suppliers are focusing too much on LTE and taking their "eyes off the ball"? Telstra is the first operator to launch HSPA+ service that offers peak rates of 21 Mbps, using modems jointly developed by Telstra, Ericsson, Qualcomm and Sierra Wireless. Telstra is planning to upgrade the HSPA+ network to provide max speeds of 42 Mbps by year-end. It is fair to say that Telstra may not need LTE for a long time! Ericsson has already demonstrated HSPA+ multi-carrier technology with 42 Mbps in Barcelona. China Unicom, which received 3G license last month, plans to launch HSPA service in May, and have 80K base-stations deployed by year-end, covering 70% of Chinese population, an impressive commitment!

Is it WiMAX time? There was some uncertainty around WiMAX deployments and vendor initiatives related to WIMAX. Alcatel-Lucent's approach is not clear, while ZTE is taking advantage of the WiMAX opportunities in the developing markets. Moreover, discussions around peer-to-peer city-wide Wi-Fi networks and increasing number of Wi-Fi enabled handsets may certainly not augur well for WiMAX deployments in developed markets. Generally, WiMAX was very low key at this event.

Femto what? Several Femto products were demonstrated, including Ubiquisys & SerComm announcing the availability of their integrated home gateway with 3G Femtocell technology, and Netgear showcasing its 3G Femtocell Voice gateway delivering converged network services. Several operators are looking at Femto deployments as part of the transition from 3G / HSPA to LTE in the future. It is fair to say that Femto has more religious followers than rational drivers!

Chips for anyone? Texas Instruments has exited the baseband business and is now focusing on app processors, with OMAP-4 announcement, with 1080p video record/playback & 20 Megapixel imaging capabilities. Qualcomm, fresh from its acquisition of AMD's graphical processor assets, unleashed a flurry of new chipsets in line with Snapdragon - integrated application processors with audio/video codecs, camera video playback, GPS engine, support for Bluetooth, Wifi, FM radio, universal broadcast modem for MediaFlo, DVB-H, ISDB-T, wireless WAN connectivity etc. Intel's focus continued to be on their MIDs powered by the lower power Atom microprocessor. However, Intel's CEO reiterated their recent announcement of $7 Billion major investment for 32 nanometer chip development!

Chinese are coming? Equipments? Handsets? One of the most interesting announcements was that Qualcomm and Nokia are burying the hatchet and collaborating to develop W-CDMA based 3G handsets, using Symbian S60 OS and Qualcomm chipsets. It will initially be available in the U.S. by mid 2009 and subsequently in the rest of the world. I believe the major drive for this collaboration is to compete with the Chinese vendors more effectively. ZTE was talking about launching a number of operator branded smart phone models while Huawei is already talking of a white-label Android smart phone launch. In fact, Huawei and ZTE are doing extremely well winning contracts all around the globe! The joint venture of Asustek and Garmin is also expected soon to launch their new smartphone with a particular focus on location based services and navigation software from Garmin. PC maker Acer launched a range of smartphones, all of them with touch-screens and HSPA capabilities, targeting consumers with personal and professional features. We should expect other new players joining Acer in the near future. Hyundai handset for anyone?

Touch-screens, 3D and Green phones? Samsung took the lead with touch-screen phones, indicating that they will have 20 touch-screen phones launched this year alone! High-end Omnia, the first solar-powered touch-screen called BlueEarth, and a full-touch slider phone called UltraTouch were on display at the show. Samsung's BlueEarth is not just the first solar-powered full-touch screen phone, but full of environmentally friendly features as well. LG announced Arena, which features a new 3D S-class user interface, taking advantage of Touch screens and 3D cube layout, with 4 customizable home screens. Samsung also had Optima on display, with embedded projector, in collaboration with Texas Instruments, who shrunk the DLP pico projector chip into the handset ? By the way, 8 Megapixel is the new norm for the cameras on the handset, and there is talk of 12 and even 20 Megapixels. Do we really need this?

Speech and Text Recognition? Consumers continue to demand easier and better user interfaces. Speech and text recognition are very relevant technologies to explore and promote in addition to touch-screens. Several companies were demonstrating at the show including Nuance, Spinvox, Vision Objects, mScriber etc. Moreover, to reduce the keyboard bottleneck on handsets, new word pattern recognition technologies from Dasur and Swype are also finding their way into the market breaking the speed barrier of the traditional keyboard entry mechanism.

Universal Charging Solution and other green initiatives? The UCS initiative announced by GSMA is being backed by 17 major players, including operators and manufacturers, for a "one-size-fits-all" charger by 2012. This could lead to 50% less chargers built every year, 50% reduction in stand-by energy consumption and 3 times more energy efficiency than current chargers. It will be using a micro USB as a common charging interface. This is a great initiative for the industry and for our environment - however can handset vendors do away with the additional accessory revenues in these recessionary times remains to be seen. Also, solar-powered base-stations are being deployed around the world. Orange, for instance is deploying 1000 such basestations in Africa this year.

Open Source? One of the big tectonic shifts happening is Open Source, with its effects now reverberating into every corner of the mobile software industry. Everyone is asking "what should be our open source strategy?" Nokia is now unveiling the details of the Symbian Foundation governance, which may be summed up to "open source capitalism".

Where is Android? Vodafone announced Android based HTC Magic handset, to be available in the UK, Spain, Germany, France and Italy. Magic is slimmer than G1, contains a Qualcomm chip, but it is lacking some of the user interface advantages of its competitors as well as service integration. It is a bit of a surprise that there were no other Android handsets on display, but up to 20 Android handsets are expected from other handset manufacturers by year-end, with the possible exception of Nokia. For example, Huawei announced that they will ship their first Android handset later this year, and it will most likely be white-labeled. What is interesting is that Huawei's Android phone looks awfully like iPhone!!

App Stores for anyone? Even though iPhone was not officially present in MWC, most operators seem to be taking note of the iPhone and App Store, and developing & deploying similar Mobile App Stores (MAS) to position themselves more effectively in the value chain. For example T-Mobile Germany is launching, jointly with Nokia, their own widget-based platform, to provide similar experience as iPhone and iTunes App Store. T-Mobile is also supporting iPhone / iTunes App Store, Android G1 / Android Market, Nokia Ovi, and its own MAS, providing a broad range of options for their users. China Mobile announced an Android-based software platform and App Store to be available later this year. Nokia unveiled the details of their Ovi App Store, which includes download on S40 phones in May, and which will be automatically placed in Nokia handsets. Microsoft is launching an App Store later this year, with a huge target of 20K apps. Yahoo has also upped the ante with their new Yahoo Mobile product with the ability to add their widgets, integrate the search, mail, calendar features and link to any application store Wow! As a result, many vendors of ODPs, content delivery solutions, even Java tools were repositioning themselves as MAS solution providers (e.g. SurfKitchen, Cibenix, Cellmania, Everypoint, mPortal, Javaground, SlideME, Tanla, etc). Yet most vendors currently provide a partial MAS solution.

App Environments. To ride the growth in mobile applications, Open Plug has launched a new open source application development environment. The interesting new runtime is leveraging Adobe Flex tools to develop apps outside Flash Lite. We think this is the first of many such efforts to come, where the emphasis is on the tools, not the runtime. Each of these will ease the issue of mobile fragmentation, helping mobile application developers with the development and porting of applications onto a multitude of handsets and operating systems.

To Skype or not to Skype? Skype reached an agreement with Nokia that it will be integrated into Nokia N-Series Smartphones starting with the N-97 later this year, This is a major coup for Skype. It is interesting that, on one hand Nokia is partnering with operators like T-Mobile in extending OVI as an operator application platform to help grow data revenues, on the other hand, it may be cannibalizing operator voice revenues with the Skype client extended onto the Nokia handset. There are also rumors that Facebook and Nokia are in negotiations to cement a partnership that would extend Facebook's presence on Nokia phones. MySpace is also making some new moves (e.g. new wireless web site, apps for Nokia's S60 and Palm), expecting mobile to drive 50% of the site visits in the next 2 to 3 years, compared to around 15-20% today. With integrated contacts and address books, social networking and the mobile industry are coming together and bringing out the best in both.

Where is Mobile TV? Mobile TV was relatively low key at MWC 2009. However, Qualcomm and Spain's Abertis demonstrated a live MediaFlo broadcast mobile TV service during the Congress, with more than 30 channels. Also, High Definition (HD) video over LTE is getting significant attention, and there were several demos and announcements during the Congress. Does this mean, forget about SD Mobile TV, and fast-forward to HD Mobile TV with LTE? Also MOFILM, the mobile short film festival for 5-minute films targeted for handsets was held during MWC in Barcelona, with the "English as a Second Language" winning the Grand Prize :-)

Where is Mobile Advertising going? There were lots of positive announcements, indicating that mobile advertising might be bucking the recession. KPMG's survey of media and ad execs found that 87% of respondents say they will move more content and more ad spending to mobile. 48% quote location-based ad formats as the greatest opportunity for mobile ads, closely followed by games and video. Since interactivity is very critical for mobile ads, Mobile Interactivity Group announced that it has reached a milestone of 500m mobile marketing "interactions". However, on the negative side, there was no follow-on mention of last year's statement where Vodafone, Orange, O2, T-Mobile and Three announced that they would work together to develop a common measurement standard for mobile advertising. This indicates a lack of agreement between the major operators and the advertising industry. It looks like we have some distance to go on industry-wide collaboration!

Recognition. Some of the major awards given during MWC:

• Best mobile game - Gameloft with Real Football 2009
• Best mobile TV service - MobiTV
• Best mobile ad service - Turkcell
• Best mobile handset - INQ-INQ1
• Highly commended Handset - Nokia E71 and T-Mobile G1
• Best SDP - NewBay Software
• Best Mobile Technology Breakthrough - RIM Blackberry Storm
• GSM Chairman's Award - RIM

The MWC 2010 will be held in Barcelona during 15-18 February 2010. See you there.