October 30th, 2012 / Insight posted in

Telecoms: Predictions for 2011

The year of the tablet

Following the success of the iPad, every device manufacturer now wants a piece of the action in what is expected to become a fiercely contested market. We have already seen Samsung launch the Galaxy, with others soon to follow. However, it won’t be until late 2011 when we will start to see how this plays out.
 

The winners will be those devices incorporating the features people want, at the right price point. Screen size is a hotly debated topic, with different sizes appealing to different types of user. However, we believe it’s the smaller, seven-inch screen that will be most popular.

The eagerly awaited launch of Apple’s second generation ipad – likely to come in a range of sizes – is expected in early 2011. RIM’s Playbook will capture some attention, but it’s Samsung that will aggressively grow this market the fastest in 2011.

NFC becomes reality – but not with a bang

Nokia will activate Near Field Communications (NFC) in 2011, having already built it into its C7 handset. Google’s new Nexus S, running on Android 2.3, also features NFC technology.

 

With these and other manufacturers announcing that they are due to start shipping handsets containing RFID chips, NFC will become increasingly pervasive, with the mobile wallet being the most exciting possibility. However, it will take time for readers to become ubiquitous and for remaining security concerns to be allayed, meaning although NFC will take off, there will be no big bang arrival in 2011.

Avoiding a bandwidth crunch – just!

 

 The explosion of social networks means that carriers must keep up with bandwidth requirements. LTE will start to appear, having just been launched by US operator Verizon and soon to be introduced by AT&T. Rather more discouraging for the UK however is news that the process of releasing ‘super-fast’, LTE-friendly, next generation mobile broadband spectrum is unlikely to complete until “the end of 2013”.

In the meantime, UK operators are expected to overcome their long disagreements over spectrum allocation and work hard to make use of existing capacity, which should be just about sufficient for the next couple of years. However, there may be some creaking at the seams. 

The mobile internet becomes a reality for all

 More and more consumers are visiting social networking sites, such as Facebook, for their online interactions, and increasingly doing this using mobile devices, such as smartphones and tablets, which are becoming more widely adopted. It’s the functionality of these mobile devices that are driving take up.

Smarter applications mean social gaming will increasingly move to a mobile environment in 2011, becoming the most frequently downloaded category of App and growing worldwide mobile games revenues to $10bn. Navigation, augmented reality, video and, of course, adult will also be high on the list of downloads.

A fight for OS supremacy

 

 For a long time, Symbian has held the lion’s share of the mobile OS market, but recently this has been in decline with competition from the likes of Google, RIM and Apple.

Customers are increasingly aligning themselves to an operating platform because of the applications they can use. We have already seen success for Android in 2010, and we expect this to continue with the latest version – 2.3 (Gingerbread) – as it finds itself on an increasing number of budget handsets, from Samsung, LG and Sony Ericsson.

New launches will also come from RIM (OS6), Symbian 3 and 4, Apple iOS4, and Windows Phone 7. Microsoft has the most to lose in the move from the desktop to the mobile and although it will be fighting hard, we don’t see it becoming dominant in the long term. Following its recent reorganisation, Symbian will also be fighting to head off further losses in market share, but it is expected to struggle to stem this loss in 2011.

The ongoing battle of the handset manufacturers

Nokia is still the biggest volume manufacturer, but will continue to lose market share in 2011. The principal competition will come from Samsung, which recently posted a 19% increase in handset shipments over the last year. Aggressively seeking growth, Samsung is behind Google’s new Nexus S, which we expect to be a winner. Competition will also come from Apple and RIM, as well as local unbranded and white label manufacturers in India, Japan and China.

The eagerly anticipated release of the i-phone 5 is expected in the summer of 2011. Specifications are likely to include a digital wallet and LTE support, both widely mentioned as the next generation of mobile technologies and which others will have to incorporate in order to promote and sell handsets successfully. However, in the long term, the iphone will never be a mass market product, but will certainly have great appeal to a niche market.

Expect a convergence of sectors, not just geography

Thanks to several large deals, such as Bharti’s acquisition of Zain Africa and Telefónica’s purchase of Portugal Telecom’s stake in Vivo, 2010 has seen a turnaround in telecoms M&A and debt transaction activity. With some regional tie ups recently announced, next year is expected to be a busy one.

We will also see a new wave of telecoms and media convergence in 2011 – after a period of marginal, low-value activity since 2005 – as the fixed and mobile internet converges with TV. Content becomes king as operators are keen to offer services. Other areas for telecoms providers include moves into eHealth.

Expect more data caps and fair use policies in data plans

In 2010, to combat the explosion in data use, some operators introduced tiered data plans. Expect this trend to continue in 2011.

We expect operators to continue to compete on price for offerings on data usage and calling plans. However, they will increasingly enforce ‘fair use’ policies and data caps, with the best interests of their customers in mind. Protecting the quality of the service they provide is paramount.

The year mobile video calling takes off

The i-phone 4 and the recently released Nexus S have paved the way for a new generation of mobile interaction. The Samsung Galaxy tablet, with its rear and front-facing cameras, will no doubt be copied by the arrival of new tablets on the market in 2011.

While mobile video calling will never replace written and voice communications, it will start to become more common place later in 2011, especially in a friends and family setting. We will see handsets offering increased picture quality and related video features.