Consumers value privacy…when the price is right

Posted on April 27, 2012 by Marlène Sellebråten

Personalisation of services could mean more than data protection

Consumers will choose a more privacy-friendly provider given that:
…the various providers’ respective privacy policy is made visible and
…the price for a service is the same.

But lower the price of the service and consumers will most likely switch to a less privacy-friendly provider. This is one of the major results of “Monetising Privacy”, a report recently published by Enisa, the European Network and Information Security Agency.

In an extensive lab, field and hybrid experiment, participants were given the choice between two providers with a comparable service. Giving more data to the provider also meant getting a more personalised service in the case of a repeat purchase. And the results are rather telling.

Price and the benefits of personalisation may mean more than privacy.

People do care about privacy. But within limits.

As many as 93 percent of participants in the survey’s laboratory experiment said they were either “interested” or “very interested” in whether a firm protected their information. Knowing that 47 percent of service providers treat personal data as a commercial asset and 48 percent share it with third-parties, according to Enisa’s research, makes it all the more relevant a question.

But being interested in personal data protection does not equate to an unwillingness to share such data. Indeed, according to Special EuroBarometer 2011:40, 90 percent of online shoppers state they have disclosed their name and 89 percent have disclosed their address.

Given an equal price and equal amounts of collected data, 60 percent of respondents chose the more data-friendly provider, in Enisa’s research. That firm’s share soared to 83 percent when data gathering differences were made visible.

Yet, once a lower price comes into the equation, the more privacy-friendly firm loses much of its competitive advantage.

About a third of respondents were prepared to pay a mark-up price for privacy when buying something online, but the majority chose to switch to a less privacy-friendly provider, given the price for its services was lower. The numbers are telling again: If the data-friendly provider offered a higher price, then its market share decreased to 31 percent.

In other words, a majority of respondents were unwilling to pay a mark-up price for privacy.

The competitive implications pertaining to the protection of personal data are far-reaching. Personalisation – made possible by a bigger amount of collected data – can make it harder for a consumer to switch provider, because of the time spent giving their personal data, and the tangible return in the shape of a personalised product. The less privacy-friendly provider got indeed a higher share of repeat buyers, compared to the privacy-friendly provider, according to Enisa’s study,

Is it then worth it for a provider to differentiate on data privacy?

Enisa’s recommendation is that users should be given a choice about how much personal data they will disclose. Where we traditionally have compared prices between providers, we might want to compare service providers’ collection and use of personal data in the future, concludes Enisa.

In our eyes, the survey shows that price still is the most discriminatory choice factor for consumers. A perceived cost-saving, and a personalised service outweigh privacy as a choice criteria.

Practical implications

We should bear in mind that the survey only looks at transactions intermediated by money, thereby excluding social networks and free online services. It is also worth noting that respondents were based in the EU, that is, in democracies, where arbitrage between privacy-friendly and less privacy-friendly providers is possible.

Nevertheless, we dare to do some extrapolation:

Regulation
If personalisation indeed is a competitive advantage, chances are the question of user profile portability will eventually land even higher up on competitive authorities’ agenda.

Corporate IT
Should the respondents’ arbitrage between privacy and price, with regards to money intermediated transactions, even check out in a wider web service and social network environment, corporate IT policies may need to look at safeguards as bring-your-own-device, BYOD, continues to grow.

E-commerce
At equal prices, a majority of users will tend to choose a privacy-friendly provider, provided the data collection policy is made visible. It is worth it for an e-commerce site to offer this visibility, for users will tend not to look for it if it is not readily available.

At different price levels, about a third of respondents will still choose the most privacy-friendly provider. A third of the market is still a good business to be had. There is therefore a market for more privacy-conscious users, ready to buy goods and services at a higher price point.

Less privacy friendly providers had a higher share of repeat buyers, because gathering more data enabled them to personalise their service offering. We can draw two conclusions here:

* There is a good market for companies offering lower prices while collecting more data, and hence offering personalisation.
* There is a good chance that, at similar prices, and collecting the same amount of data (thereby offering personalisation), a provider making its privacy policy visible would attract users to a higher extent than a provider not making it visible.

Enisa’s report is available here.
DIW Berlin (The German Institute for economic Research) and Kinorix contributed to the report.

Here are some sites of interest if you want to read some more on data protection in the EU.

European Commission’s leaflet about data protection.
EU’s data protection minisite

Workplace 2016 – A walk in the park? Yes, but not for dinosaurs

Posted on April 4, 2012 by Marlène Sellebråten

Next generation workplace requires next generation mindset

By Priya Sawhney

Picture this: a workplace in 2016. The median age of employees is 40 years old, a much lower global median age due to emerging market populations (for example, 50 percent of India’s population is under 25 years old today) and employees are more multi-cultural and networked than ever before. Workforce competition from emerging markets is much stronger. People live and work more prominently in green buildings that have quadrupled in number. Virtually hanging out in social networks, consuming books and magazines in e-book form and streaming music take an ever growing share of our personal time…ooops. Did I just say personal time? Personal time and professional time are so intertwined going forward that working 9 to 5 is more theory than practice. Boundaries between physical and virtual lives too have blurred even further. Devices are commodities (though Apple and Android still lead in the OS space).

This makes for interesting challenges ahead for enterprises and end-users. It might be literally a virtual workspace, wherever you are – for example on a bench outdoors – but it will be far from a walk in the park.

For starters, I hope device manufacturers are able to keep up with the demand on mobile device batteries as media consumption spreads from mainly laptops today to laptops, tablets and smartphones. This sets high expectations and demands on guarantees and quality of service for network operators.

The biggest demands on both operators and device/OS players will probably be about privacy and security. End-users need to understand the risks and proactive measures that must be taken to protect their privacy and guarantee security, while enterprises must enforce security and privacy policies. Simultaneously the industry will need to drive common standards. Though it is hard to say what or who “The Industry” will be in 2016, given the many different kinds of players and the rapidly changing market dynamics.

As the physical and virtual world and private and professional spheres converge, the EUs Data Protection Directive (related to the processing and management of an individual’s personal data) may well turn out to be even more vital than today. And much trickier to follow.

Enterprises and individuals must start gearing up for a future that is right around the corner, one that will set demands on a different kind of infrastructure, business processes and legal frameworks.

The emerging instantaneous lifestyle combined with social media demands a shift in human capabilities too, whereby people in our Google and Twitter and Facebook society become more demanding, increasingly impatient and have a shorter attention span. This sets increasing demands on customer service, crispness in communications, performance and speedy execution. The days of the long drawn out meeting and discussions and internal politics are coming to an end. Those dinosaurs that do not proactively accept this new speedy and transparent networked world will – well – probably have the same fate as that of the dinosaurs. Only the process of extinction will be much much faster this time round.

MWC 2012 or how the mobile industry manages disruption

Posted on March 6, 2012 by Marlène Sellebråten

By Marlène Sellebråten

This year’s Mobile World Congress – with record attendance – was a very good indicator of the changes the mobile industry has been going through in the past few years. Not least those originally brought about by Apple. That network infrastructure, including cellular networks, has gone all IP is the true disruptor of traditional telcos’ business models, bringing data hungry applications in the palm of everyone’s hand. And the mobile web was unsurprisingly very central to services and devices presented at Mobile World Congress in Barcelona this year, even more so than in previous years.

But where was Apple, when over 67,000 mobile industry people gathered in Barcelona last week then? Ironically, nowhere to be seen. Just as last year.

Well, Apple did not create the mobile web after all, and they were a no show in Barcelona, so why talk about them here then? Simply because Apple succeeded in placing this disruptive technology in a disrupting business model, which empowered end-users, enabled other disruptors to come to the front and ultimately gave the mobile web its original mass market appeal.

25 billion app downloads and over 500,000 direct and indirect job creations later (This is Apple alone!), and parts of the “traditional” mobile industry are still struggling to figure out how to deal with this disruption. Be it OEMs trying to take (back) the lead or operators painfully acknowledging that their business model must adapt to the mobile web. We will see tomorrow, as Apple runs an event of its own, if the company succeeds in keeping the momentum at last year’s high. For sure, Apple’s absence from Mobile World Congress – and its timely announcement of its own event during Eric Schmidt’s keynote – made the company all the more present in Barcelona.

In the meantime, web players such as Facebook and Google where the ones taking centre stage at Mobile World Congress. Not only physically, they were also top of mind when it came to a vast number of topics: Mobile data explosion, video traffic, mobile operating systems, the social web, Big Data and analytics, location-based services, not to forget user data and targeted advertising. Two companies, which only a few years back, were nowhere near the mobile industry, are now at its very heart. And we bet that within five years, keynotes will be delivered by yet another round of new disruptors taking the mobile and social web to the next level. Some of which we may even have met at MWC this year!

Foursquare CEO Dennis Crowley, HTC CEO Peter Chou and Nokia CEO Stephen Elop

Here are the key topics, which kept Close to Market busy in Barcelona. Stay tuned for more detailed posts on each and one of these!

Mobile OS: It ain’t over till the fat lady sings
Boasting 850,000 device activations per day at the end of February, Android seems unstoppable. But other players have not said their last word. Nokia, also en force in Barcelona, announced it had lowered the price point for producing Windows Phone devices, giving it a better shot at targeting migration from feature phone and going head-on against Android phones at lower price levels. Let us not forget this is where the mass market is! Nokia’s Windows Phone strategy has also started to bear fruits: In February, Nokia was for example back in Swedish Telia’s top 10 selling smartphone list, after eight months of absence. In Finland, Nokia’s Lumia topped Elisa’s smartphone sales in February. We also take a closer look at efforts by Facebook, Mozilla/Telefonica and WAC focusing on HTML5 application development and distribution. Much talk about HTML5, not so much traction yet, but given support and distribution, this may be about to change.

Mobile data: OTT broke our business model
The “Google/Apple/Facebook broke my business model” talk is not new, but it was still going strong in Barcelona as a few prominent telco CEOs once again stated that OTT players – in particular in the video and tv space – must not only share the opportunities, but also the risks. Read: chip in and participate in network investments. Answering a question from his keynote audience about this very topic, Google’s chairman Eric Schmidt made it very clear that what a player like Google brings to the table is web services that stimulate mobile data growth. Mobile data traffic is where telcos need to look at in order to grow their revenue and recoup their costs.

Google's chairman Eric Schmidt delivering a keynote

We look at how mobile operators positioned themselves towards OTT in Barcelona, from blocking of and charging for OTT services to embracing an OTT friendly approach. We also look into more ”operator friendly” OTT players, which terminate call and messaging traffic in operators’ infrastructure. And then there is RCS of course: Is it viable and if so how, or is it too little too late?

Offload and migration to faster cellular technology a necessity
One topic buzzing all over Mobile World Congress was the need for offloading data from cellular networks onto other types of infrastructure, in particular wifi, and the increasingly pressing need to migrate to more advanced, faster technology, in particular 4G/LTE, but also IMS. Regarding offload, operators often have no visibility over what end-users offload, where they offload, and whether it is secure. But no matter whether telcos are supportive of offloading, end-users will find a way to do it, be it to gain higher access speeds, reduce data costs, and not least reduce roaming charges. We look at how telcos’ wants and end-users’ needs can be reconciled.

Mobile money: Battle of the ecosystems – which place for the end-user?
Having been a judge for the World Communications Awards in the past four years, I have had the privilege to look into many innovative mobile money services in developing countries. Services we could only dream of in our developed markets. To put it simply: in countries where the payment infrastructure is lacking, operators, merchants, employers and people must find a way to move money between one another. And they do find a way to do it. In developed markets, the question of mobile money has more to do with established players not loosing out because of new technology, as much as about what we can replace the existing payment system with. Nothing gets done, at least not quickly, because telcos, banks, card issuers and merchants all have different views about how to do it, who should own the system and who should profit from it. We look at the various value propositions presented at MWC. Few of them had the end-user at heart, which in our view is the most important success factor.

Get in touch with us for more information about how these topics affect your business. Use the comment box or send us a mail: marlene@closetomarket.com

Facebook’s 3 monetizing challenges: Payments, mobile and non-US users

Posted on February 7, 2012 by Marlène Sellebråten

As Facebook is gearing up for its USD 5 billion Initial Public Offering, IPO, the release of its prospectus at the end of last week made for an interesting read. While the social network’s revenue and income growth path since its launch in 2004 is commendable (check it out here), here are three major challenges – and just as many opportunities – which Facebook has yet to address:

Diversify revenue within the payment segment
Monetize mobile products
Increase revenue per user outside the US

Challenges are opportunities: For Facebook, just as much as for its competitors, telcos and new entrants. Opportunities to grow, to compete and to collaborate.

Challenge 1: Diversify and grow payment revenue
Almost all revenue within the Facebook’s payment business comes from Zynga

Payment revenue grew 425% in 2011, ad revenue 69%

Source: Facebook, Close to Market Analytics

Just as the US generates much more revenue than other regions – with 56 percent of total revenue of USD 3.7 billion – one customer, also based in the US, weighs a lot heavier than any others within Facebook’s payment segment: Zynga. The social gaming company actually brings Facebook close to all of its revenue within the fast-growing segment, and as much as 12 percent of the social network’s total revenue, with about USD 445 million, in 2011.

Putting things in perspective, payment revenue accounted only for 2 percent of Facebook’s total revenue at the end of December 2009, against 98 percent for advertising. At the end of December 2011, payments generated 15 percent of Facebook’s total revenue, having increased by 425 percent in 2011! In comparison, advertising revenue grew 69 percent.

This is partly how Facebook did it. Since May 2010, Facebook has been taking 30 percent of the value of every purchase in Zynga’s games on Facebook. This fee agreement will expire in May 2015 though. Besides this deal, Facebook made the use of Facebook Payments mandatory in July 2011. The payment platform had by then already gained adoption and started to generate significant revenue.

The growth pace of Zynga’s revenue on Facebook has been slowing down over the past two years however, but its importance to Facebook has on the contrary been increasing, from less than 10 percent in both 2009 and 2010 to 12 percent in 2011. Bear in mind Zynga also spends ad money on Facebook.

A challenge for Facebook is to demonstrate that it can continue to grow within that segment beyond Zynga. Adding new payment methods, as the company is planning to do, may be one of the ways to do just that.

Challenge 2: Monetize mobile products
Facebook generates close to no revenue from mobile products

Monthly active users, MAUs, and revenue, 31 Dec 2011

Source: Facebook, Close to Market Analytics

Facebook said it before and states it again: Mobile products are a strategic priority. Yet, the social network must prove it can make money out of that channel. The situation with mobile is similar to that of Pages; both products are user and engagement magnets, but when used as substitutes rather than complements to Facebook’s ad bearing channels, they are a no money game.

Not only has Facebook usage via mobile products increased, accessing the social network that way has been a major contributor to higher user engagement. At the end of 2011, 425 million users were using Facebook’s mobile products, that is over half of the total user base. But again, as Facebook does not display ads in that channel, it makes close to no money there.

Facebook plans to address this gap and monetize its mobile products for instance by including sponsored stories in users’ mobile news feeds. It is said to be launching such a solution in March. In its IPO prospectus, Facebook also makes it clear it wants to ”be the fastest and most reliable way for users to communicate through” e-mail, chat and text messaging.

Facebook was able to increase its price per ad thanks to its efforts in terms of increasing relevance. There is no reason why Facebook should fail in monetizing mobile products. It could be a tough nut to crack though, as competition within mobile advertising is popping up everywhere, in all shapes and forms.

Challenge 3: Increase revenue per user outside the US
US revenue per user over five times higher than in other markets

Besides mobile, Facebook has done a remarkable job with growing revenue, revenue per user and engagement. The pace of user and revenue growth rate has of course been gradually slowing down over the years, as the social network has reached a critical mass in many markets.

Average revenue per user, Dec. 2011

Source: Facebook, Socialbakers, Close to Market Analytics

But there are more markets to be addressed, in particular in Asia, South America, India and less penetrated European markets such as Germany. Taking a closer look at Facebook’s business across various regions makes yet another challenge obvious: Facebook users outside of the US generate less money than US users.

Indeed, 56 percent of Facebook’s total revenue of USD 3.7 billion for financial year 2011 was generated within the US alone, while the region only accounts for 19 percent of Facebook’s total user base. This means that revenue per user in the US is more than five times higher than revenue per user outside the US, or 12.8 USD against 2.4 USD. The average revenue per user for Facebook’s total user base increased by 35 percent to 4.39 USD between 2010 and 2011. Other major revenue driving regions are Western Europe, Canada and Australia.

What does this all mean?

It means that, although Facebook has grown at an incredible path and has had a huge impact on the social web, it also face challenges. Challenges which are just as many opportunities, not only for Facebook itself, but for all other players wanting to get a piece of the pie.

Want to know more? Get in touch with us!
marlene@closetomarket.com or +46 702 955 551

Gear up for continued transformation in 2012

Posted on January 17, 2012 by Marlène Sellebråten

Telco Insight
by Priya Sawhney

Apple, Facebook and 21 December 2012. These are the three things that will get special attention from me this year. What do they have in common? They are all about transformation.

There is no arguing that the iPhone has raised mobile phones to an entirely new level of personal interaction. Simultaneously, speedier access through 3G and 4G networks has made spending time with your smartphone a fun thing to do. Then came the iPad… Add virtual communities and instant collaboration enabled by Twitter, Facebook and Google and you get a networked, layered culture where information is delivered through multiple channels, quickly disseminated… and quickly redundant.

800 million worldwide had Facebook at the end of December 2011

Data source: Internet World Stats, Socialbakers

The select “connected” individuals’ behaviours are fundamentally changing: they are individuals who think differently, process information differently and interact and communicate with others in new ways. Their resources increase through tapping into the social and collaborative nature of man.

Regardless of which job they have, those who master these new behaviours will have an immense advantage over all others. Here are some of the changes they will bring about:

Death of traditional hierarchies and hierarchy-driven cultures and economies.
Growth of demand for holistic thinkers and people who thrive in fuzzy gray workzones rather than black and white line organizations.
Growth of a new kind of complexity in information management where the winners will be the gestalt thinkers – holistic, intuitive and perceptive.

To us in the communications business, it means that we should gear up for continued transformation in people, business and our industry. These connected people are blazing the path for a changed information society, with:

More socially aware and linked “global” citizens
Work in networks rather than linear structures
Information search and buying behavior changing from traditional web browsing to purchase using peer group recommendation on social networks
Visual, capable and speedy individuals

And these are some of the things it entails for our industry:

Increased focus on big data
Need to provide multiple platforms across multiple access forms as media consumption becomes device agnostic
Give the people what they want: freedom of choice. Due to their emotional and intuitive approach to end-users, Apple and Google – and for that matter Samsung – stay the People’s Choice in 2012. They continue to gain ground against older monopolistic PC/OS suppliers.
And of course – security, privacy, mobile data growth, mobile device management (Check out Priya’s take on consumerisation in the workplace here).

What about 21.12.2012 then?

The Mayans predicted a major reorientation of life around this date. There are those who treat this to mean doomsday, those who predict environmental or planetary disasters, those who see this as societal transformation and those who do not believe in this prophecy in any way. If it turns out that 21.12.2012 is about transformation and change for the better, then I am willing to wager that always connected smartphones and social media will help make this happen.

But let us remember that this transformation is far from uniform. Facebook’s rapidly increasing global penetration (See graph 1 on Facebook) shows the growth of a digital planet, a parallel world that is just a few clicks away. Yet a digital planet only accessible – and accessed – by some segments in human society. And the speed of spread of this change is incredible. A new kind of survival of the fittest.

Facebook set to transform the mobile app economy

Posted on December 5, 2011 by Marlène Sellebråten

By Marlène Sellebråten & Katarina Chowra

Fresh rumours of a Facebook phone, codenamed Buffy – the Android and Apple slayer? – have resurfaced. Taiwanese cellphone maker HTC is said to be the vendor chosen to build the mobile device, according to AllthingsD. However, according to the news outlet, Facebook is not only talking to HTC but also to Samsung, the world’s largest smartphone vendor as of Q3 2011.

The extension of the Facebook Platform to mobile back in October – with or without the rumoured smartphone, for that matter – marks an escalation in Facebook’s ambitions in the mobile space. And by mobile space, we mean apps, search, digital advertisement and not least online payments. Facebook’s mobile platform supports iOS, Android and HTML5-based web apps. It also extends Facebook Credits, Facebook’s own payment system, to the mobile web. Let us keep in mind that Facebook today has got about 800 million users worldwide, of which 350 millions are accessing the social network via their mobile devices.

In our view, Facebook’s heavy backing of HTML5 is one of the most interesting news in the mobile web space this year.

There is today no established distribution channel for web applications, only keyword search. With its huge global user base, Facebook is indeed well positioned to become that marketplace. Distribution is the key success factor for HTML5.

The rumoured Buffy phone confirms where Facebook is headed. The application platform the phone is said to be supporting is ”a modified version of Android that Facebook has tweaked heavily to deeply integrate its services, as well as to support HTML5 as a platform for applications”, writes AllthingsD, citing sources familiar with the project.

The magic world here is not so much Android – although it is indeed relevant – as HTML5.

Developing a phone around Android would allow Facebook to deepen its mobile relationship with a fast growing number of end-users. But by going all-in on HTML5, Facebook would reach out to multiple OS and handsets. Support to the existing mobile OS is nevertheless crucial. Indeed, technically, HTML5 does not yet offer all the functionalities and advantages of native applications. In particular, native applications can take advantage of handset hardware in a way HTML5 as of today fails to replicate. Developers we talked to believe it will take a long time for HTML5 to become the dominant mobile platform. In our view, the support of players such as Facebook, Microsoft and even Spotify, will accelerate the take-off of HTML5.

Google’s acquisition of Motorola Mobility Services back in August (you can read Close to Market Analytics’ take on this here), Android’s extraordinary growth and Google’s launch of social network Google+, could potentially leave Facebook hung out to dry, with no control over either handset or platform integration and development. Let us also remember that Apple integrated Twitter in its newest handset – the iPhone 4S – not Facebook. Having said that, rather than an aggressive forward-looking strategy, Google’s and Apple’s actions in the social web space look more like defensive moves against the ever more almighty player: Facebook.

That Google, also a supporter of HTML5, is not pushing harder on the standard is somehow surprising. HTML5 should be their ultimate dream for all mobile services – since it supports their ad business. For Apple, who also supports HTML5, it is a different story altogether. Promoting anything else than native apps, at least at this point in time, would be like shooting themselves in the foot. The vendor has even been accused by developers of purposefully slowing down web applications. And last we checked, a mere 1 700 web apps were available from Apple’s web app store. Quite understandably, look not for the App Store’s blockbuster apps there.

Facebook’s developing a phone, and an app marketplace, has to do with keeping control and leveraging ad and search to a massive user database, while undercutting the current market leaders. Device market dynamics also show the growth and profit margin being higher with an end-to-end streamlined solution. By pushing a web based application platform and reducing vendor dependency, Facebook could even provide telcos with a helping hand. Although these may have to adapt by offering their subscriber base a premium mobile Internet experience, and possibly accept to become ”bit pipe providers de luxe” going forward, at least in the consumer space. As far as our discussions with telcos go, the prospect of yet another apps platform is however met with pragmatism, not to say skepticism.

Now one last thing: The very fact that a Facebook phone makes sense, does not mean that such a move will be a successful one for the social network leader. A seamless Facebook integration in a smartphone, coupled with a guaranteed high quality mobile broadband plan is, in our view, what many consumers are waiting for. Considering how Android took off out of nowhere, it feels like whoever gets this seamless integration right will manage to surf on that wave. For Facebook itself, the stakes are higher though: establishing itself as the mobile application platform of choice. An application platform with a strong focus on HTML5, and support for existing platforms Android, iOS and Windows Phone.

Marlène Sellebråten, Close to Market Analytics
In collaboration with
Katarina Chowra, Mobile Marta

Get in touch with the authors

Marlène Sellebråten, Close to Market Analytics
+46 702 955 551
marlene@closetomarket.com

Katarina Chowra, Mobile Marta
Katarina.chowra@mobilemarta.com

Time for a telecom news roundup with Telekomnyheterna

Posted on December 1, 2011 by Marlène Sellebråten

Time to round up this past year’s major industry news!

Telekomnyheterna, the leading business newsletter reporting on the Swedish telecoms market, organises on 7 December in Stockholm its traditional year-end network meeting to discuss 2012’s major telecom events.

On this occasion, Close to Market Analytics’ principal analyst Marlène Sellebråten will participate in a panel discussion led by Telekomnyheterna’s editor in chief Mats Sjödin. Fellow panellists include Erik Hörnfeldt, CIO at Swedish mobile operator 3 and David Frydlinger, attorney at law firm Lindahl, with more to be announced.

The debate and mingle event will take place between 17:30 and 20:00 on 7 December 2011, in central Stockholm. Attending is free of charge but requires prior registration. Contact directly info@telekomnyheterna.se if you wish to attend.

Telco Insight: Consumerisation in the workplace

Posted on November 9, 2011 by Marlène Sellebråten

Enterprise ICT: What to expect by 2014
By Priya Sawhney

I have been tracking developments within the mobile operating system (OS) market with growing intensity over the past months. But more interesting than vendors’ changing fate on the smartphone market, it is the very fact that corporate end-users have so widely adopted them that has disrupted the whole enterprise ict space. There is enterprise ICT before smartphones and enterprise ICT after smartphones.

In just 24 months, smartphones – especially from nontraditional players – in combination with social media and mobile data pricing, have turned traditional workplace ICT practices upside down. And started a perfect storm of consumerisation in the workplace.

Many companies are focused on millennials, targeting a generation born in the last 20 years. All of us in the 20 to 55 age group that use Twitter, Facebook and check in on our smartphone wherever we are, we are more youthful than ever before, mentally, intellectually and in our aspirations. In a sense, we are all millennials.

This change in behavior requires that companies in mature ICT markets get ready for some more changes ahead. Below are some of the trends I see becoming mainstream in the coming 24-36 months.

Device agnosticism

The days of IT choosing preferred mobile devices in the workplace are ending. Security policies and mobile policies will be ubiquitous – and an eclectic mix of smartphones and tablets in the digital workplace will be the rule rather than the exception. PCs still rule, but Mac lovers get increasingly rebellious…

Device management will become a standard feature in IT departments.

Transparency and integrity

The blurring of boundaries between private and public life continues to increase as social media lowers barriers. People – and companies – are increasingly forced to be authentic and consistent across private and public messages.

Demand for constant high quality connectivity

People are always online, privately or for business. A plethora of connected personal mobile devices opens opportunities for companies who can guarantee high speed, high quality secure access to personalized services anytime, anywhere.

A personal reflection in conclusion:

The last 24 months have changed our ways of behaving, moving communications out of the physical sphere into a digital virtual world that has data instantly in our hands. Whatever the coming months and years will bring, it is going to be an amazing journey.

Samsung’s support critical to Google-Motorola deal

Posted on August 18, 2011 by Marlene Sellebraten

No matter how positive Samsung execs have talked about Google’s proposed acquisition of Motorola Mobility earlier this week, the deal presents Samsung with at the very least a complicated situation. Because Samsung is by far the vendor that has ridden the Android wave with most success. The fact is Google has not only bought itself a patent portfolio, it has also acquired a manufacturing capability for mobile phones, set top boxes and even infrastructure. The deal also reinforces the close partnership on Android between Google and Motorola, which de facto becomes a preferred partner.

An integrated Google/Motorola operation could be on a collision course with Samsung’s operations. That is, provided competition authorities let the ad and search giant buy Motorola Mobility and Google then chooses to keep not only Motorola’s patents but also their handset and set-top-box manufacturing business.

This signals a change in Google’s strategy.

Google has many times declared it wanted to stay out of the actual manufacturing business (and outsourced the manufacturing of its Nexus handsets). And indeed, their intent is to keep Motorola as a stand-alone company. According to Google’s CEO Larry Page’s blog post on the deal, Google will license Android to Motorola, just as it does to the other OEM vendors using the platform.

Becoming a handset maker could however make it difficult for Google to pursue a ”neutral” licensing of Android and instead prompt a tiered approach, whereby Motorola could become Google’s preferred hardware partner. It all depends on how Google decides to play it. The carriers we talked to are confident Google will read the market correctly and play it “hard and well” in partnership with Samsung. The handset vendor has indeed built a solid relationship with both customers and telcos and established a strong brand. Customers may be buying Android handsets from other OEM vendors, but they are definitely buying Samsung phones from Samsung, not Android phones made by Samsung.

“Its not just about OS. Its about marketing and customer perceptions”, says one carrier to us.

It is unlikely Samsung would chose to side with Microsoft as this would help Nokia, but Samsung could instead decide to focus even harder on its own OS, Bada, and maybe entice others to join them. HTC could more easily be tempted to side with Microsoft, but they too might not want to help Nokia. As for Research in Motion, the Google/Motorola deal is just as bad a news as Nokia’s deal with Microsoft was.

Google might have waited to see if they could buy Nokia. With reasons: The move shows that Google indeed has a hardware game plan. Possibly not only in the mobile space, but also in the TV space. Motorola Mobility, market leader in the set-top-box space, is bound to have a handful of interesting patents there too.

No question Motorola Mobility’s patents will give Google greater bartering power in current and coming patent lawsuits against other mobile vendors. And this is the very core of this acquisition – although it remains to be seen what these patents are worth. Yet, Motorola Mobility’s Home Devices business is worth to take a closer look at, in the light of Google TV’s lack of success thus far. The TV screen is a spot in the market, which Google has repeatedly tried to enter, a content and ad space it has until now failed to conquer. Well, maybe no more.

”Motorola is also a market leader in the home devices and video solutions business. With the transition to Internet Protocol, we are excited to work together with Motorola and the industry to support our partners and cooperate with them to accelerate innovation in this space”, Google’s CEO Larry Page says in yesterday’s blog post about the Motorola acquisition.

Yet, it will not be easy, as Cisco’s recent dumping of all of its home technology products shows: Home entertainment is a tough market.

Another thing: The platform war turned into patent war is a sure sign of one thing, maturity. The mobile industry’s coming of age quite simply means there is not a spot for everyone to grow in, as there was only three-four years ago. Some have to go, and Motorola is only the first one to go through the motions. Google’s acquisition of Motorola is the first major acquisition in the OEM space. By no means the last. After Nokia-Microsoft, Google-Motorola, will we be looking at Samsung-Android or Samsung…?

And truth be told, patent lawsuits by the bucket and the battle for the winning platform may pan out well for telcos. When Nokia/Microsoft, Apple and Google/Motorola are busy competing with one another, there is less time for them working on undermining the operators’ business case.

Close to market – Opinion

May 2012
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