Keynote Benchmark

he world’s largest gathering of the mobile ecosystem convened in Barcelona, Spain last month, attracting 49,000 attendees

from carriers, device manufacturers, developers, the media, and interested onlookers. According to GSMA, organizer and

host of the four-day Mobile World Congress, attendees hailed from 200 countries and included 2,800 CEOs.iT

Mobile Industry Update: Barcelona 2010

A Report on the Mobile World Congress and What to Watch This Year

2

Such robust attendance is a sign that the

mobile industry is ready to shrug off the

world’s economic woes, if it hasn’t done so

already. It’s also a sign that the myriad mobile

players are anxious to find out where the

frenetic changes in the industry are taking

them, what technologies they should hang

their hats on, and how they’re going to make

(lots of) money.

The industry appears to be on the

cusp of major changes on a variety of fronts,

from network technology to applications to

how devices are being used. A sea change

toward smartphones, and smartphone-like

functionality on feature phones, is clearly

underway. As keynote speaker Eric Schmidt

put it, “it’s now the joint project of all of us to

make mobile the answer to pretty much

everything.”

For some “old-timers” in attendance,

it felt a lot like the 1990s all over again, a

miniaturized replay of the scramble brought

on by the ascent of the World Wide Web.

Browsers were duking it out for the desktop,

broadband technology was getting sorted out,

dot-coms were attracting cash beyond all

reason — and in the midst of it all, enterprises

were trying to figure out how to leverage this

exciting new channel.

The analogy is apropos, but with

significant differences in velocity. The

technology is moving at a much more rapid

pace; the tech industry is that much more

mature today, and simply moves much more

quickly. At the same time, carriers with their

huge and expensive infrastructures are being

deliberate in their progress, making sure their

central role is not undermined even as they

begin the first phases of huge investments to

accommodate exploding data usage.

STEVE JOBS WINS TOP AWARD, IN ABSENTIAApple doesn’t even attend MacWorld, the show

that’s just for Apple, and they don’t attend the

Mobile World Congress, either. But that didn’t

stop the Global Mobile Awards from dubbing

Jobs the Mobile Personality of the Year. The

moment must have been a bit awkward, with

no one from Apple to accept the award, and

the most prominent runner-up, Google’s Eric

Schmidt, in attendance and delivering the

show’s keynote address.

In a way, the scenario was symbolic

of the relatively new and increasingly bitter

rivalry between Apple and Google, which is

being fought almost entirely on the mobile

front. For now, Jobs and Apple are still the

industry darlings. Indeed, it is not a stretch to

trace virtually all of the major trends and

technology in mobile operating systems,

software, interfaces, and app stores to the

iPhone. But Schmidt, Google, and Android are

fast at Apple’s heels, and clearly are serious

about the fight. With 60,000 Android-driven

phones shipping every day, according to

Google’s reports — an annual rate of 21.9

million units — they could pass the iPhone

installed based before the end of 2010.ii

“Definitely the iPhone is changing

the world — it affects every company out

there,” says Shlomi Gian, Keynote’s director of

mobile business development, who was in

Barcelona for the congress, “But Android is

catching up. Many people believe Android will

take the lead not too far from now.”

A BALANCE SHIFT TOWARD MOBILE?Is the online access point of choice shifting to

mobile? Benchmark has reported previously

on the predictions that say it will be so. Most

visibly, perhaps, the Morgan Stanley “Mobile

Internet Report,” authored by Mary Meeker,

that predicts that in five years, more people

will access the Internet on mobile devices than

on desktops. Already, the report says, “the

iPhone is growing faster than the Internet did

during the 90s.”iii

A recent report by Gartner concurs

that smartphones will be the most common

primary Internet access device by 2015. The

installed base of smartphones and browser-

equipped phones will actually exceed the PC

installed base as early as 2012, according to

Gartner, but they will not serve as the primary

access point until 2015.iv

In his keynote at the Mobile World

Congress, Schmidt sounded a theme of

“mobile first.” He cited the “three Cs,” three

drivers that will push mobile to the foreground

not just of daily online access, but of daily

computing. First is computing power itself —

the tremendously increased processing power

of mobile devices. Second, connectivity — the

installation of higher-speed, higher-capacity

wireless networks. And third, the cloud — the

tethering of mobile devices to remote servers

not just to store or access data and media, but

to tap into tremendous processing power.

According to Schmidt, Google

engineers now want to work on mobile first,

Keynote Benchmark

The Android home screen here looks strikingly similar to an iPhone home screen. But the Android OS can be implemented in different ways by device manufacturers, and the home screen can be customized by the user, for wide variations in interface look and feel.

and then have their products ported back to

the desktop. Several Google engineers joined

Schmidt onstage to demonstrate a few of the

mobile projects they’re working on. An

engineer from the translation group demoed

both real-time voice translation — he spoke

into the phone in one language and Google

computers in the cloud instantaneously

translated it into another — and also print

translation, where he took a photo of a menu

with his phone and Google translated it into

his native language.

A second engineer demoed Google

Goggles, an app that lets you search using the

phone’s camera. Take a picture of a book or

DVD, landmarks, a logo, artwork, business,

product, barcode, or text, and Google delivers

descriptions and data about the subject.

Google Goggles is currently available on

phones running Android 1.6 and above.

Another Google engineer showed a

game built in Flash running on an Android

phone, which highlighted Adobe’s important

announcement at the show of Flash 10 and

AIR for mobile devices (except for Apple,

which rejects Flash).

6,850,000 APPS EVERY DAY?There was a time when phones were used for

talking. But for the first time, in 2009 U.S.

data traffic exceeded voice traffic on mobile

phones, and that ratio is expected to widen in

2010, according to industry observer Chetan

Sharma.v And one of the biggest drivers of that

data, in the U.S. and around the world, is apps.

Apps have been around for mobile

phones for quite a few years. But once again,

it was the iPhone and the Apple App Store

that caused a veritable explosion in mobile

phone apps. In 18 months, users downloaded

3 billion applications from the App Store;

reports quote Garnter putting Apple’s 2009

share of mobile apps at 99.4 percent. No, that

is not a misprint, and yes, that number is

nearly impossible to believe; readers sent Ars Technica back to Gartner and to Apple to

confirm the number, which they did.vi

Whatever numbers you go by, the

Apple App Store is a multi-billion business

(even accounting for the many free apps), and

Apple takes a 30% cut of every app sold.

Gartner puts 2009 app volume at $4.2 billion,

contributing an estimated $1 billion to Apple

revenues.vii

So, let’s do the math: If Apple

accounts for 25.1 percent of mobile subscribers

as of January 2010,viii and Apple moved about

2.5 billion apps in 2009,ix then that would

indicate an unfulfilled potential of 7.5 billion

apps to be sold for non-Apple smartphones,

roughly speaking. In other words, the biggest

piece of the pie is waiting to be served. And

using Gartner’s numbers, that unserved pie

should be worth about $16.8 billion.

Enter App Planet, the newest

addition to the Mobile World Congress, a

show-within-the-show in its own exhibit hall

that attracted more than 20,000 visitors. App

Planet gave developers, manufacturers and

carriers the opportunity to check out each

other’s wares, and for the big players to hold

application developer conferences. The mere

existence of the App Planet, as well as the

announcement there of the Wholesale

Application Community, points out the almost

feverish land-grab mentality that has taken

hold of the industry around apps.

The Wholesale Application

Community was formed by two dozen carriers

literally from every corner of the globe, plus

Samsung, LG, and Sony Ericsson. Its stated

purpose is “to create a ‘wholesale applications

community’ that will establish a simple route

to market for developers, in turn, providing

access to the latest and widest range of

innovative applications and services to as

many customers as possible worldwide. This

alliance will deliver scale unparalleled by any

application distribution ecosystem in existence

today.”x

It’s a lofty ambition, and if it can be

pulled off, it could theoretically simplify life for

developers trying to tackle multiple operating

systems. But whether a globally diverse group,

primarily made up of carriers with very

different markets, different needs and different

business objectives, can pull together and play

nicely in the same sandbox together remains to

be seen. And in the end, how wise a strategy

would it be for carriers that are trying to

competitively differentiate themselves? If

3

Keynote Benchmark

Google Goggles lets Android users search using the camera’s built in phone. Snap a photo of a landmark, building, product, book, barcode — basically anything that’s not a person — and Goggles will deliver information and search results.

This was the first year for MWC’s App Planet, a separate exhibit hall devoted entirely to mobile applications. Some 20,000 attendees passed through App Planet.

customers can get the same apps and a decent

phone from any of their local carriers, where

does that leave the carriers? In the Q&A

following the keynote, an audience member

questioned whether Google was trying to turn

the carriers into “dumb pipes” that are merely

the conduits for data, a charge Schmidt

emphatically denied. But through WAC, could

they be doing just that to themselves, in return

for a cut of app sales?

Even network equipment

manufacturers are getting into the app act.

Alcatel-Lucent announced at MWC a cloud-

based “sandbox in the sky” development

laboratory to help coordinate and accelerate

broad-based app development. The new

initiative follows on the heels of their

Application Exposure Suite, announced in

December 2009.xi With these efforts, Alcatel-

Lucent appears to be positioning itself as a

broker and go-between among carriers,

developers, and content providers, and would

take a cut of whatever is created in the process.

BUT WHAT OPERATING SYSTEM?Despite efforts of various players to come

together on apps, the fact remains that the

mobile industry is seriously fragmented among

operating systems. This is a persistent

challenge for developers, and a situation that is

not likely to change soon.

The Mobile World Congress saw its

share of operating system announcements.

The biggest was the introduction of Windows

Phone Series 7 (more below). Others included

Symbian^3, an open source version of the

operating system most closely associated with

Nokia. Symbian^3 adds improvements in

touchscreen features, memory management,

graphics and UI to the widely distributed

Symbian OS, which claimed a 46.9 percent

share of smart mobile devices shipped

worldwide in 2009, making it the most widely

used smartphone OS.xii

Also announced was MeeGo, a mash-up of

Nokia’s Maemo and Intel’s Moblin, both

Linux-based operating systems. And Samsung

introduced a new operating system, Bada, for

its Wave phone,xiii which begs the question: if

Samsung chooses Microsoft for its search

engine, will it be called “Bada-Bing”?

WILL 7 BE A CHARM FOR MICROSOFT?The biggest OS news at MWC was that

Microsoft is restarting its mobile operating

system, jettisoning the flawed Windows

Mobile platform, and introducing the

Windows Phone 7 Series. It will include

Microsoft’s Zune music and video software,

and be able to run Xbox LIVE games. And

naturally, it will include Bing search and map

services, reportedly accessible via a dedicated

hardware button.

A fresh user interface feature on the

Phone 7 Series is the organization of

functionality around “hubs” — the

music+video hub, the people hub, etc. The

people hub reflects the platform’s potentially

impressive social media integration, enabling

users to pull from and post to a variety of

social media communities from one central

screen.

At this point, Microsoft Phone 7 is

something to watch on the horizon. Its release

is slated for “holiday 2010,” which ostensibly

means the end of this year. Microsoft will have

to overcome the serious stumble it made in the

mobile market with Windows Mobile; it has

demonstrated its ability to overcome its own

missteps in the past. But a year is practically

an eternity in today’s mobile market —

especially a year in which Google Android is

anticipated to gain serious traction.

“Microsoft is making a desperate

attempt to get back into the game,” Keynote’s

Gian says, “They made a big push. They

realized they’re late. So Windows Phone 7 is

coming in December. Between now and then,

though, all they can do is wave their hands,

and that’s what they did. Steve Ballmer was

there, and they put up a pretty good demo.”

“I think a lot of folks, myself

included, are probably thinking ‘hmm,’” adds

Keynote Senior Director of Mobile

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Keynote Benchmark

“People” is one of the “hubs” in the future Windows Phone 7 Series interface. Hubs cluster related functionality into one screen. The People hub promises advanced social networking functionality, enabling users to push and pull status from various networks all in one place.

Keynote Benchmark

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FOOTNOTES

i. GSM World, “The Mobile Communications Industry Demonstrates Momentum,” 2/18/10

ii. Mashable.com, “60,000 Android Phones Shipped Every Day, Says Google,” by Stan Schroeder, 2/17/10

iii. “The Mobile Internet Report,” Morgan Stanley, December 15, 2009

iv. “Gartner Top End User Predictions for 2010: Coping with the New Balance of Power,” summary report, Gartner, Inc., 2010

v. ChetanSharma.com, “US Wireless Data Market Update — Q4 2009 and 2009,” by Chetan Sharma, 2/2/2010

vi. ArsTechnica.com, “Apple responsible for 99.4% of mobile app sales in 2009 (Updated),” by Chris Foresman, updated 1/18/10

vii. The New York times, “A Conference Keen on Finding Open Communication,” by Kevin J. O’Brien, 2/17/10

viii. comScore Press, “comScore Reports January 2010 U.S. Mobile Subscriber Market Share,” 3/10/2010

ix. op cit

x. www.wholesaleappcommunity.com/home

xi. Alcatel-Lucent press release, “Alcatel-Lucent opens developer sandbox in the sky,” 2/16/10

xii. Ubergizmo.com, “Symbian remains top, Android closing in,” 2/23/10

xiii. PCMag.com, “Mobile Platform Competition Benefits Consumers,” by Michael J. Miller, 2/17/10

xiv. Rethink Wireless, “TeliaSonera aims to boost LTE performance to 80Mbps,” by Caroline Gabriel, 3/14/10

xv. The New York Times, “Mobile Data, the Next Generation: High Speeds but at What Cost?” by Kevin J. O’Brien, 2/16/10

xvi. ibid

5

Technologies Manny Gonzalez. “There’s

nothing there that makes you want to run out

and get it as soon as it comes out. But they

have a track record of coming in and just

systematically getting there. Microsoft has

shown that they can take their time and still

come back.”

THE NEED FOR SPEEDThe undercurrent to all the new product

announcements and apps and slick new

phones was the question of the networks

themselves. How will they accommodate the

tremendous new data demands being placed

on them by all of the new smart devices? How

will they service a world that is increasingly

using mobile devices for primary Internet

access? How will they deliver the speed that is

a requisite for a quality user experience?

The leading topic in the network

conversation in Barcelona was LTE, or Long

Term Evolution, a next-generation technology

that offers theoretically possible peak

download speeds of 100 Mbps and beyond.

Already deployed in parts of Scandinavia, test

results show that LTE is delivering average

speeds of around 12 Mbps. Verizon Wireless

reports its testing has achieved download

peaks of 40–50 Mbps and upload peaks of

20–25 Mbps, but average speeds hover around

5–12 Mbps for upload and 2–5 Mbps for

download.xiv

Nonetheless, 51 of the world’s largest

operators have expressed their intention to

adopt LTE, with 19 expected to begin this year.

Several big players have indicated they may

begin introducing LTE service in 2010 or 2011,

including AT&T and Verizon Wireless in the

U.S., Australia’s Telstra, and Japan’s NTT

Docomo.xv

The costs to build out an LTE

network are monumental, which no doubt

accounts for carriers’ measured embrace of the

technology. The New York Times quotes a

London research firm, Aircom International,

as estimating a price tag of $1.8 billion for a

U.S. operator and $880 million for a European

operator in the first year.xvi

UNTIL NEXT YEAR…The Mobile World Congress highlighted a

number of things to watch in 2010, and a

number of questions looking to be answered.

Will it be the year Android achieves critical

mass and gives the iPhone a run for its money?

Most likely. Will the various players, mostly

the carriers, collaborate successfully and arrive

at some sort of standards or common

infrastructure and cooperation for apps? We’ll

see. And will Microsoft succeed in getting back

into the mobile game with Windows 7 Phone

Series? That’s likely a story for 2011 and next

year’s MWC.