TiEcon is the world’s largest conference for entrepreneurs, focusing on technology markets, entrepreneurial opportunity and innovation. Now in its 16th year, TiEcon 2009 was themed "The BOLD Entrepreneur." The record-breaking attendance of over 3,500 included entrepreneurs, venture capitalists, industry executives, analysts, engineers, and business leaders. TiEcon 2009 lived up to its entrepreneurial spirit by featuring dynamic speakers who showed how they adapted to changing conditions and create their own future, despite a very challenging economic climate. This article reviews two wireless panel sessions, which had a very pragmatic market and business focus.
Wireless – What’s Working, Where and Why?
This session examined the mobile applications, content and services that are gaining broad user adoption. It provided a global perspective of users, usage and market dynamics, the trends, opportunities and words of caution for entrepreneurs going forward.
The panelists were:
- Bernard Gershon, Gershon Media
- Atif Hussein, Nokia
- Yves Maitre, Orange
- Dilip Venkatachari, New Enterprise Associates Ventures (ex-Google)
Mr Gershon was very bullish on mobile video on cell phones, which has been predicted for a long time, but hasn’t happened yet. He assured us that this would be the year (we’ve heard that one before). Bernard stated that mobile video was happening in Korea, with full-length TV episodes (which suck up a lot of mobile network capacity, perhaps requiring a separate dedicated video network).
Mr Atif Hussein of Nokia reminded us that messaging continues to be the “killer app” for mobile phones, but that it continues to evolve and change. Social networking (e.g. Twitter, Facebook) and Location Based Services (LBS) provide opportunity for application software developers. The objective is to connect people wherever they might be and provide location relevant information and entertainment. Atif identified sensor networks and related apps as a growth opportunity. He cited a machine-to-machine locator capability to find “missing cows” in developing countries like India.
Mr Maitre of Orange told us that smart phones and multi-media messaging were “hot” areas. He identified several mobility issues that need to be addressed:
- Partnerships are either being neglected or not working well. The industry needs to reinvent the way companies cooperate with one another.
- Consider the immense processing power people will have in their hands as semiconductor technology continues to progress. What will smart phone, netbooks and gadget makers do with that processing power? What new apps will evolve to take advantage of it?
- Privacy is a huge issue for the industry. With all the information being exchanged over the air, how will user privacy be protected?
- Speeding up the U.S. patent process to protect IP. It now takes 36 to 39 months to obtain a U.S. patent.
Mr Dilip Venkatachari stated that for most of the developing world, the most practical applications of a mobile phone are voice and simple text messaging. He gave India as an example, where farmers get weather alerts and exchange crop price reports with each other via cell phones. “Everything is linked to payments,” he continued. If the price of the phone service, phone and apps drop, that will stimulate much more demand. He noted that there were already 4B mobile phones in use worldwide.
In the developed world, Dilip said that equipping field personnel with mobile phones was a promising new application space. He cited emerging respondents and health care as important examples.
With the increased adoption of smart phones and apps, what are the issues and opportunities? Here are selected comments from the panelists:
- Nokia says that 100M of the 1B mobile phones sold last year were smart phones, with perhaps 200M smart phones to be sold in 2009. Netbooks are also selling very well.
- Orange says that more netbooks are being sold this year then smart phones.
- Mobile payments- from vouchers or pre-paid plans is a huge issue. Cellular operators should segment users by their needs and payment methods. Scalability of the payment method to accommodate multiple users with different payment plans.
- Life style applications (not identified) were seen to be a very promising area.
- Extended battery life is a huge issue, especially when multiple radios are included in the same phone, e.g. WiFi and cellular.
- 3rd party apps to take advantage of Nokia’s capabilities for hand held devices, e.g. maps, messaging, music, cameras, etc. Apps should be optimized to the device.
- App developers have to choose amongst competing mobile operating systems, e.g. Google’s Android vs. Microsoft’s Windows Mobile vs. Nokia’s Symbian vs Apple iPhone, etc. They had better chose carefully!
- Netbook price will be driven down by the competition between Intel and Qualcomm, resulting in even more demand. Orange and NTT DoCoMo will soon sell a 1G byte Mobile Internet Device (MID) with a built-in phone and 7” or 8” screen. Netbooks and MIDs will create a “new revolution” in wireless connectivity, according to Orange.
What’s the role of mobile network operators now and how will it change in the future?
Today, cellular carriers certify applications, while device makers optimize their devices to certain classes of apps and not others. However, it’s the users and not the carriers that understand and select the mobile apps. The user’s experience will ultimately determine the market for new mobile apps and operators will have to adjust their roles accordingly.
According to Orange, the role and functions of the mobile operator will change markedly by 2014 in order to accommodate the quantum increase in processing power of hand held devices. The operator will need to: protect the identify of the mobile user, bill correctly, provide on-screen information that is needed at the right time and place – safely and securely.
Wireless – Where are the VC’s investing?
During this panel session we heard from five VCs about the hot segments and opportunities in the Wireless Industry. Derek Kerton of the Kerton Group moderated the panel session. The panelists were:
- Shawn Carolan, Menlo Ventures
- Ajay Chopra, Trinity Ventures
- Scott Raney, Redpoint Ventures
- Janice Roberts, Mayfield Fund
- Richard Wong, Accel Partners
Here are a few of the questions considered by the moderator and the panelists:
- Are devices the enablers or are mobile apps the differentiators?
- Apps, Smart Phones (Rich Client) apps or SMS based apps?
- Native or web browser-based?
- If devices, what types? Integrated feature packed or targeted low cost?
- A look ahead to provide a sense of where VCs see opportunity for growth and where the bets are being placed e.g. Applications vs. Infrastructure, LBS and Social Networks, consumer Internet vs mobile enterprise?
- Mobile messaging (SMS) continues to be the “killer app.” The “bread and butter” mobile apps continue to be mobile messaging, and teleNavigation (turn by turn directions). Gaming is coming on strong as another “legacy” app.
- A lot of new apps have been developed in the last 12 to 18 months. It makes sense to aggregate many of these apps into a package and scale them to the appropriate distribution model.
A few data points expressed by Ms. Roberts of Mayfield:
- Business models are lagging far behind innovation, e.g. mobile browsers, video and LBS’s.
- It’s difficult to identify vertical markets and properties for mobile apps.
- A portfolio of “bundled” apps might be interesting.
- More opportunities in wireless infrastructure, as carriers move to more open and less proprietary platforms to deliver mobile services.
- The applications running on open platforms may not be hosted by the carriers.
- No hot companies have been identified for new investments.
Apps and app stores: The biggest change in the mobile world has been the large number of new companies that have “sprouted up” in bursts to provide apps for the iPhone and Android platform. The companies get a “proof of concept” via app stores. New entrepreneurs are looking at enhancing user experiences on the “consumer Internet,” as users have gotten much more “Internet savvy.” Many of the entrepreneurs starting these new companies are moving quickly to make money from app stores- a great new distribution channel.
Richard Wong of Accel Partners said there was a new surge of opportunities in wireless backhaul. Today, the average cell size has a backhaul capacity of only five T1 circuits, which will need to be significantly upgraded to accommodate the increase in mobile data traffic. Mr. Kerton noted that backhaul is front and center on the cellular carrier’s radar screens. But what about the cellular access network?
How will cellular carriers solve the bandwidth bottlenecks in their access networks due to the exponential increase in mobile data traffic from smart phones, notebooks and netbooks? Richard Wong of Accel Partners provided his prescription:
- Cell splitting- reducing the cell radius so there are likely to be fewer users per cell. Distributed Antenna Systems (DAS) were being used for this.
- Move to more spectrum efficient network technologies based on OFDM/OFDMA, e.g. WiMAX or LTE
- Block certain types of traffic or meter traffic to limit bandwidth hogs
- Move some of the data traffic to WiFi premises networks (but WiFi radios and interfaces consume a lot of power which decreases hand held device battery life)
- Use a separate network to carry broadcast video traffic
Author’s Note: At the April 19, 2009 Telecom Council meeting on Wireless Infrastructure, Qualcomm and others suggested that network topology changes could be exploited to improve mobile network capacity. Femto-cells were seen as one way of taking traffic of the cellular network and placing it on the (mostly wired) broadband access network.
What business models and new products/ services have potential? What are the key unresolved issues? Here are a few suggestions:
- “Mobile game town” has been successful in Japan. That model can be used to establish virtual goods and virtual communities on the mobile Internet.
- Mobile advertisements- still an experimental area. Carriers don’t want to inundate users with irrelevant information. The key question is how to monetize mobile advertising?
- Success of netbooks, especially amongst college students should be exploited. Mobile operators may sell netbooks like they sell phones and handhelds.
- Licensing apps vs. subscription model for aggregated apps needs to be sorted out.
- Location based social networking for iPhone and Android is a huge potential opportunity.
- Combining voice recognition technology with maps also has potential.
Will open access change anything (vs. the “walled garden” approach of the cellular carrier controlling all apps and devices on the network). It hasn’t really happened yet, according to the panelists. For instance, AT&T blocks Skype use on the iPhone and also blocks Sling Media over its cellular network. Perhaps cellular networks will be truly open when devices based on Google’ Android platform are in more widespread use.
We are in the early stages of mobile networks that are in transition: from cellular networks that adequately support voice, text messaging and email to mobile broadband data/ video networks that also support voice. This will be a big challenge for incumbent network operators and a huge opportunity for quick and nimble new players