Our new Digital Media Correspondent Levi Shapiro provides an overview of what major experts see coming in the fast evolving sector of mobile communications and mobile advertising.
This week marks the start of H2, 2011-a perfect time to consider key trends for the mobile sector in 2012. Three of the sharpest researchers in the industry, Nitesh Patel (Strategy Analytics), Michael Vakulenko (Vision Mobile) and Dr. Bruce Krulwich (Grizzly Analytics) share their predictions for 2012. In short, next year will see mobile devices driving commerce, Apple and Google battling for ecosystem dominance and mobile location services more deeply integrated into our daily lives.
Why Mobile Will Drive Commerce in 2012?
Nitesh Patel, Senior Analyst- Wireless Media Strategies:
The mobile phone is evolving into a power commerce tool, enabling consumers to review products, run price comparisons, access inventory levels and make transactions both over the mobile network and the retail point of sale. However, while industry commentators have hailed the virtues of mobile commerce for some time consumers have not responded positively- beyond buying ringtones and wallpapers. So why will m-commerce blossom in 2012?
First, some large web retailers indicate that mobile is becoming a significant sales channel. In July 2010, Amazon announced that mobile devices generated US $1 billion in sales, 3.5% of its net sales during the 12 month period. Last month Ebay stated it expects to process $3 billion in payments (via PayPal) in 2011. To dispel the view that big ticket items aren’t ripe for mobile commerce, Ebay indicated 3-4 Ferraris are sold via its mobile application each month!
Second, we expect more retailers to create mobile sites enabled for mobile commerce. For a long time, web traffic from mobile devices has been negligible. Once it accounts for over 10% of traffic, as it does for some retailers, merchants start to view it as a missed sales opportunity.
Third, a slew of services will be launched in 2012 enabling consumers to make small value payments by tapping their NFC (Near Field Communication) enabled mobile phone against an NFC retail point of sale. 2012 will be a critical year for driving NFC handset sales and encouraging retailers to adopt the technology, although we expect end-user adoption to lag due to inertia.
Finally, consumers increasingly recognize that product reviews and price comparisons conducted on mobile devices enable better purchasing decisions both in and outside the store. Importantly, mobile payment is convenient and enables consumers to buy products when and wherever they want.
Battle of the Product Ecosystem Mobile:
Michael Vakulenko, Research Partner, Vision Mobile:
Apple and Google turned the mobile industry on its head by creating vibrant product ecosystems– encompassing devices, content and on-line services.
The Apple ecosystem is optimized for a premium user experience, delivered via iconic devices sold at premium prices. In contrast, Google's ecosystem is optimized to maximize the number of people accessing Google's ad-supported services via a variety of devices.
Both Apple and Google must expand their experience ecosystems across screens, shifting the battleground from Smartphones to tablets and finally the living room. The outcome of this competitive struggle will be decided by how successfully they can offer a wide selection of content across all devices. This includes music, premium video, e-books, magazines, games and applications (http://en.wikipedia.org/wiki/Mobile_applications).
Both companies need content licensing deals with cloud infrastructure to make the content available across all connected devices. Apple dominates content, while Google leads in cloud infrastructure.
Apple will build on its content strengths while investing heavily in cloud services. The recently announced iCloud service is the first move in this direction. The service detaches iTunes content delivery from PC dependency- helping to consolidate the product experience of iPhone, iPad, Mac and Apple TV.
Google owns the more robust cloud infrastructure but does not match Apple in content. Google will invest in securing big content deals and strengthening content delivery services for Smartphones, tabletsand connected TV. This includes partnerships with music video site Vevo, Google TV and the nascent Google Music and Google Movies.
Console game platforms: Sony ( www.sony.com), Microsoft (www.microsoft.com), Nintendo (www.nintendo.com) are still leaders in living-room entertainment- but on the defensive. This is due to fragmented product experiences that are particularly weak on Smartphones and tablets. While Microsoft and Sony will continue to close these gaps, they won't challenge the leadership of Apple and Google in mobile devices.
A New Level of Location Integration, Dr. Bruce Krulwich, Partner, Grizzly Analytics:
One trend worth noting is handsets using location to assist our daily routines. Right now, GPS is used mostly for applications like maps and navigation. Currently, we turn these apps on and off as needed. Soon, location will be deeply integrated into our regular activities.
The tipping point will be Apple’s upcoming introduction of location-based reminders in their iOS. These location-based reminders can notify you to pick up a prescription at the neighborhood drugstore as you near the store. The iPhone might also remind you to buy flowers for your wife's birthday on your way home from the office.
Based on current research by handset manufacturers, this is just the tip of the iceberg for location integration. In the future, we will be reminded to fill a prescription when passing ANY drugstore. We will be reminded to buy the new John Grisham novel when passing a store that has it in stock. The phone will automatically switch to vibration mode upon entering the conference room or lecture hall. We will receive a wake-up ring five minutes before arriving at the appropriate train station. The phone will provide directions to an inexpensive gas station when the car needs re-filling. The device will even remind you to phone your next appointment if heavy traffic is likely to cause a delay. All of these benefits without draining the battery.
Many of the tasks we currently do on our handsets, such as to-do items and calendar entries, relate to location. Why should consumers need a separate location app, when our phones can use location within the built-in to-do list and calendar? A new level of location integration is coming soon to devices near you.