19 February 2018
Abhishek Chatterjee

Abhi_Digital_Services

Abhishek Chatterjee - Gartner Inc.

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Mobile world Congress - Barcelona,2015 - Changing Priorities for Mobile Industry

02 May 2015  |  6865 views  |  0

The entire Mobile industry is getting disrupted across the world as its transitioning from distance based revenue model to volume based revenue model. The key actors (Mobile Operators, Device manufacturers, value added service providers, developers) in this business need to innovate and disrupt itself to stay relevant.

Mobile WORLD Congress in Barcelona this year showed a glimpse of where the industry is heading. Mobile Operators are desperate to hold on to its Voice and distance based business; at the same time finding ways to get share of ever growing data and volume based Business. In addition to Cell Phone, device Manufacturers are adding multiple Mobile devices like fitness band, watch, Home and Car IoT devices to play a leadership role in the economy. Value added service providers are trying to collaborate and build innovative, low cost, all inclusive ecosystem to deliver value to the services to society at large. Developers are trying to master the art of application design patterns for Smart Watch, wearable and other type of IoT device (Car and Home) based application developments.

Below are the key areas of discussion and debate in Mobile world Congress this year.

Changing paradigm in Mobile industry -

Mobile only vs Fixed line operators:- User experience still require the content experience in large screens. Specially Video stream can only be delivered via broadband. Hence for the foreseeable future fixed line with broadband will continue to exist and generate substantial revenue. While this business model is safe for now in developed market due to large legacy infrastructure, the emerging economies will quickly move into Mobile only model and see faster rate of innovation.

Innovation from Device manufacturers :- After a lacklustre year with Galaxy S5, Samsung has come back with a vengeance and introduced Samsung S6 - curved display. Samsung also announced "Samsung Pay", while will be lunched later in the year in US. This will take the mobile payment Beyond tap and pay and address the magnetic card reader market. Which will increase the addressable market from 10% to 90%.

While Mobile is primary device around which the Digital ecosystem is built, Mobile Accessory business is going to be the key driver for growth in next few years. Wearable is still niche area and has not come mainstream as Samsung watch sold only 720K watches last few years. Post Apple watch roll out this is expected to increase and finally we might see watch going mainstream. GSMA- lunched embedded SIM technology, it could be a potential game changer for the use-cases like connected cars & devices. HTC also lunched wearables (health device) & VR headset to capture the IoT market.

Spectrum- 2G, 3G, 4G and 5G… :- Time line to move to 5G is beyond 2020. value added Service providers are trying to push early adoption of 5G, but Operators are likely to push back due to improve their ROI for 3G and 4G investments. One of the early adopters for 5G might be Japan due to its 2020 Olympics. Otherwise we will potentially not see 5G mainstream adoption till 2020.

While there is a high demand and use-case for 5G adoption, the lower end of the connectivity i.e. 2G is in use for cellular connections. 2G is still required for low energy & M2M/IoT connectivity. Those are long cycle business and expect to stay.

Digitally inclusive society, Connect the bottom of the pyramid

Most talked about event this year was Facebook keynote from Mark and his idea abt Internet.org to reduce cost of internet by 100 times. (10x - through connectivity cost, 10x device cost). Internet.org will be rolled out across the developing world. While the idea is very novel,but we saw apprehension among Operators, who will loose the revenue to connect the bottom of the pyramid. There are larger issues around regulation (Drones and balloons) and Net neutrality, which still need to be addressed. Once these entry barriers are overcome, we will eventually see focus on consumer!!

In addition to Facebook, lot of attention was given this year on how to make the world more digitally inclusive. For example in Europe, we have 60%+ smart phone adoption. Latin America , Chaina and India - penetration is much lower, but its fast growing.  Device manufactures like Xiaomi and Micromax are driving growth at low price points (Sony, Nokia Lumia etc are feeling the heat). Firefox also entered the market with low end devices.

To reach the bottom Billion population, Potentially a combination of innovative connectivity models like Drones (Facebook) and balloons (Google) with traditional fibre optical cable and satellite based connectivity needs to be established.

Innovation in business models

Reverse auction of spectrum was talked extensively this year to free up some of the bandwidth controlled by broadcasters in favour of mobile operators. Spectrum sharing was another option discussed to improve utilization of available spectrum. Increase in availability of spectrum will lead to innovation is business models and cost of doing business will come down:-

Remote health-care - Elderly care use-case for developed market.

Bank the un-bank - Remote banking facility to reduce corruption and deliver economic benefits directly to farmers

Google becoming a wireless career - watch out for the business model.

Visual Search - Augmented reality is catching up. Blipper showed how to monetize visual search.

Mobile payments - User experience and high Security payments are coming together very rapidly. Apple-pay, Samsung-Pay etc are providing the tap and pay user-experience; In addition to that, 2 or 3 factor authentication techniques like Tokenization, biometric are provided to make payment secure. Royal bank of Canada talked about measuring the heartbeat to detect fraud. Paypal talked abt revenue from remote mobile payments and it has grown more than 70% growth over last few years. For mobile operators talked abt E2E experience for consumers and merchants to drive incremental revenue through Voucher and Coupon.

Developers & monetize Applications

Smart watch and wearables will be next big thing for developers to focus on. 35% of the IOT developers are already developing for wearable and smartwatches. Smart watch is more suitable for companion apps for the time being (mostly around Notifications). It's not going to be primary ecosystem device for the time being. IoT market for Home and automotive is the fastest growth market, specially NEST and Apple HomeKit, Carkit will drive the next stage of adoption. But the key for larger developers participation is to open up the platform, which in turn will enable developers to build a e2e use-cases, expedide innovation and make money.

Regulation, Security & data privacy

Last year saw very high profile data breach from Sony, e-bay and Adobe. Both Data and personal privacy are becoming a critical for a sustainable business model. Aftermath of Snowdon Scandal, government driven tracking has also become an issue. Google and Facebook also gather data abt individuals using their applications. Right level of application, data, network and device level security needs to be built into the device to protect interest of all.

Net neutrality - This was one of the most talked abt topic in the event, as the internet is becoming more pervasive and Omni-present. There are multiple regulations and rules being applied to protect the interest of various parties.This could lead to creation siloed networks, priorities in communications & bandwidth allocations. Initiatives like Internet.Org require Zero rate data and participation from chosen few providers. Big question mark is around its compliance on net neutrality. Further debate needs to happen around what can be considered as priority/essential services and make it freely available (i.e. Govn or other essential services needs to be free).

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