Yankee Group Assessment of 2012 Mobile Market & 2013 Predictions

From today’s Yankee Group webinar, which I attended.
2012 in Review: It’s Been a Busy Year!

  • The mobile economy went mainstream
  • 4G/LTE deployments gained momentum
  • Innovations achieved in mobile data pricing
  • Emerging markets jumped on the smartphone bandwagon
  • Power shifted in the mobile OS war
  • HTML5’s fortunes fluctuated wildly
  • Cloud‐based mobile wallets emerged
  • Mobile POS initiatives spread in U.S. and launched in EU
  • Professionals became primary drivers of enterprise mobility
  • Companies’apps initiatives shifted from experimental to strategic

Mobility in 2013 – A Make or Break Year:

The volatility marking the mobile industry is finally beginning to ease, and as the dust begins to settle, mobility’s true winners—and losers—will slowly emerge across the entire ecosystem, from devices, to applications, networks and more.  This will be the year when smart players place their bets and position themselves for long‐term success in: Mobile money, Mobile apps & cloud, Mobile broadband, Mobile devices.


  • With voice and messaging revenue on the decline, the only bright spot for operators is demand for mobile data services.
  • Globally, data revenue will increase from U.S.$319 billion in 2011 to U.S.$550 billion by 2016, and total mobile service revenue will increase from U.S.$1 trillion in 2011 to U.S.$1.15 trillion by 2016.
  • Consumers want—and demand—anytime, anywhere connectivity.  Sixty-three percent of respondents to Yankee Group’s 2012 US Consumer Survey, September state that mobile data speeds are important to them and the same number (63 percent) want to be connected all the time.
  • Mobile payments are due for a security setback. A perfect storm of ubiquitous smartphone usage, 24/7 connected devices and consumer naiveté are destined to culminate in at least one of the major cloud-based mobile payment schemes falling prey to a successful hack.
  • Enterprises are experiencing their own mobile app gold rush. • The proportion of companies increasing their budgets for mobile applications has almost doubled in the past year, from 28 percent to 51 percent of all companies spending more, with many looking at different use cases, both internal and customer-facing.
  • The iPhone continues to thrive.  Today, iPhones are owned by almost 30 percent of U.S. consumers surveyed, and 42 percent of U.S. consumers who intend to buy a smartphone intend to buy an iPhone.
  •  M2M’s potential is starting to be realized. Yankee Group forecasts the number of M2M cellular connections to grow by over 22 percent between 2012 and 2013, spurred by falling M2M device costs, ubiquitous and affordable wireless connectivity, increasing enterprise awareness and business case viability and government mandates driving areas such as smart metering and e-Call services.

Top 10 Mobile Predictions for 2013 (those in bold font are most interesting to this author): 

1.  Operators Will Lose US$1 Billion per Month in Voice/Messaging Revenue in 2013
The Upshot: Changes in customer behavior and the mobile industry in general will culminate in a precipitous drop in voice/messaging revenue; fortunately, the loss will be offset by a boost in data.

2.  By Year End, All Mobile Operators Will Be Either Digital Lifestyle Providers or Value Bit Providers
The Upshot: Both strategies are valid but ruled by different dynamics; thus both will feature winners and losers.

3.  Small Cells Will Stumble
The Upshot: Tariffs influencing end‐users to avoid mobile broadband for video will strip much of the economic rationale for extensive small cell deployment in the near term, calling into question expectations for rapid market uptake.

4. At Least One Operator Will Launch Turbo‐ Boosting Service in 2013

The Upshot: As more operators look to real‐time analytics tied to network data to speed the creation, delivery and monetization of unique product and service bundles, they will begin to learn from customer expectations and be able to track, monitor and respond to any change. As a result, they will embark on new services—such as turbo‐boosting— enabled by this new insight.

5.  By Year End, Google Will Start Subsidizing Mobile Payments Credit/Debit Transaction Fees
The Upshot: Google needs to entice merchants to accept its mobile wallet solution. Paying merchant transaction fees could prove very persuasive.

6.  A Cloud‐Based Mobile Payment System Will See a Significant Data Breach in 2013

The Upshot: Fraudsters are not naive to the opportunities presented via mobile and thus far attacks have been muted only due to the lack of scale. But in 2013, we will see the perfect storm of ubiquitous smartphone usage, 24/7 connected devices and consumer naiveté culminate in at least one of the major mobile payment schemes falling prey to a successful hack. All things equal, we expect the victim will be a cloud player, since it presents criminals with the most lucrative risk/reward ratio.

7.  More Than 50 Percent of Companies Look to the Cloud for Their Mobile App Deployments
The Upshot: Demand‐side pressures and supply‐side innovations are accelerating enterprise deployments of mobile applications in the cloud. Next year, the majority of enterprises will be deploying their applications using software‐as‐a‐service (SaaS), as opposed to on‐premises software.

8.  Microsoft’s Windows Store Will Abandon 70‐30 Split and Registration Fees in 2013
The Upshot: In 2013, competition between app storefronts will turn red hot. Microsoft will entice developers to its store by breaking with standard app store‐to‐developer business terms.

9.  2013 Will Mark the First Year That Android Smartphone Market Share Will Decline in the US

The Upshot: Stronger competition from Apple, Microsoft and even RIM will put further pressure on already inexpensive Android smartphones and their makers, forcing them to differentiate and add more value.

10.  In 2013, M2M MVNOs Will Feel the Squeeze as Operators Get Serious About M2M
The Upshot: As Tier 1 operators ratchet up their attention on machine‐to‐machine (M2M) networks to help drive new revenue, specialist MVNOs will feel the heat as they evolve from friend into foe.