Saturday, January 07, 2012

2012 in preview. Some predictions for 2012 and beyond: Identity Crisis, Going Soft, Microsoft Kinects, and more...

Since it’s the season for predictions, I’ll throw my hat into the ring. Below are some are some predictions I have for 2012 and a bit beyond. I’ve been wrong about many of these in the past, so read at your own risk.

In general, I would say that making predictions, especially about the future, is quite easy... as long as you provide yourself with a little bit of wiggle room, like 10 to 20 years. But if I have to choose some market developments for 2012, here are a few that come to mind:

1. Identity Crisis: The beginning of the end for the phone number.
Summary: The phone number as an identifier will begin its decline during 2012 and will be all but gone within ten years.

I’ve embarrassed myself many times during the past seven years with this “death of the phone number” prediction. But to me, phone numbers are like IP addresses: a terrible form of identity given out rather randomly, tied to a particular location, and usually difficult to remember.

This is an issue of network identity. We’re at a point now where we can move beyond the phone number, using such ID methods as OpenID, Google Talk, FaceTime, Skype names, and Facebook. The incumbents won’t make this easy, and there is very heavy legacy think holding us back. Nonetheless, I think we’re about to reach escape velocity and leave the phone number behind.

I’m not sure how to grade this prediction next January, but I think we’ll know it when we get there.

2. Microsoft’s Power Point: Windows Phone will take 5% market share of the smartphone biz Q4 2012: no more, no less.
Summary: Windows Phone v*.* will catch on slowly during 2012 as a smartphone platform and begin to soak up some Symbian share as well as some enterprise business. It’s quarterly share during Q4 2012 will reach 5%.

A lousy five percent? This might not sound like a risky stab at where Windows Phone will be in a year, but this would be close to a ten-fold increase to what Microsoft had last quarter and thus would be a significantly better trajectory than what Android had during 2009. Please note that I’m not talking about some Windows Mobile + Windows Phone market share combo. That’s just Windows Phone software running on handsets. Furthermore, I predict that Microsoft might actually release some real clear sales figures for Windows Phone devices at some point during 2012.

3. Newton’s law: Apple’s smartphone and tablet market share will decline during 2012. Apple suffers from software quality issues.
Summary: Apple’s smartphone market share will be diluted during 2012 and fall below the teens by Q4 2012. Apple’s global tablet share to fall to around 40% from their current ~70% level.

An immovable object? Either Apple’s smartphone margins and ASP of $630 goes down down, or their market share does. Apple’s smartphone share during Q3 2011 (around 14.5%) was actually back to 2009 levels, and about four points below levels from early 2011. While iPhone sales during Q4 2011 may have reached record levels and Apple may have taken around 18% of the smartphone market, that is where it peaks. iOS share will take 12% of the smartphone market by Q4 2012 and thus be back to levels not seen since early 2009.

In tablets, Apple, for the most part, has had the only competitive product on the market to date. But as prices get cut and competition increases, Apple will under grow the tablet market which they defined. Their global share during Q4 2012 will be cut in half from its peak, and will be around 40%.

4. Jungle Land: Amazon enters the smartphone biz, marginalizes Netflix with a strong video streaming offering, and becomes an MVNO, and possibly buys T-Mobile USA. Meanwhile, talk of Amazon monopoly heats up.
Summary: Amazon’s will branch out using their fantastic position as one of the world’s largest retailers and the world’s largest mall as they provide more consumer services.

The Kindle was just the start. Amazon will move beyond tablets and introduce a smartphone sometime during 2012 tied closely to their own content and other cloud-based services. Furthermore, Amazon will introduce their own labeled voice and data services during 2012 possibly by purchasing or investing in T-Mobile or leasing time with LightSquared. While it can be argued that Amazon is already an MVNO with the Kindle, they will become a full-fledged MVNO during 2012.

However, Amazon’s aggressive expansion into new areas will cause additional friction and spark significant new lobbying efforts against it.

5. That’s the ticket: Mobile wallet makes a big break through during 2012, but based more on barcodes, screens & cameras than NFC.
Summary: This time it’s for real: the mobile wallet really is right around the corner. Credit cards, loyalty cards, keys, tickets: they’ll all be in our phones.

Tickets, coupons, cards, and cash. 2012 will be a big year for the mobile wallet in many ways as consumers make the screen mainstream. Retailers will be forced to adapt to new shopping behaviors using a combination of technologies. Barcodes and screen readers will enable the current installed user base given the lack of NFC-enabled handsets. Mainstream NFC use is still two to three years off.

6. Microsoft Kinects: MS comes to the realization that they have the only WOW product currently on the market.
Summary: Microsoft pushes the Kinect and its technologies to new places in new ways and re-defines usability and input.

I’ve been saying for a while that the smartphone business has become rather boring. A market full of lookalike black rectangular screens and everyone playing a game of follow the leader, there has been little real innovation over the past few years. The PC market is pretty much the same. I would say the one product that has the potential to add some WOW to the mix is the Kinect. If Microsoft can port that smoothness to other platforms, they could add a dash of much needed WOW to other Microsoft-based products.

7. Last shot: Camera makers attempt to compete with smartphones with more sensors and more software and more services.
Summary: Digital cameras will begin to get competitive using established technologies such as Bluetooth, GPS, Wi-Fi, Wi-Fi Direct, Wi-Fi positioning, cloud storage & backup services, facial recognition, more touch input, and on-device apps.

I’m surprised how little the camera makers have done to add well-established technologies to their devices. I get the idea of doing one thing very well, but the smartphone market is taking away their business and Camera makers have no choice but to compete by adding more sensors and better basic processing features. I suspect that Samsung and Sony will lead the way, given their expertise from the smartphone business. The cost adding most sensors is marginal to BoM at this point. So shoot.

8. Downhill fast: LightSquared hype gets popped, unfortunately.
Summary: Things aren’t looking so bright for this LTE MVNO enabler.

I never believed much in Clearwire, but I was hoping that LightSquared would enable a new generation of wireless competition in the U.S. market from cable operators and retailers such as BestBuy, among others. Given interference issues and rapid LTE deployments, LightSquared will hit significant speed bumps during 2012 and possibly sell off frequency.

9. Going soft: software-defined radio finally has its coming out party.
Summary: SDR is nothing new, but the enabling technologies are coming around and some real commercial implementations will take place during 2012.

Software-defined radio is a glacial trend: it’s coming this way so slowly you can barely see it move. But when it hits, it will hit hard and leave its mark. I’ve been hearing talk for about a decade on how SDR will change the wireless market. Currently there are some military implementations, but device vendors of all sorts are planning commercial implementations. 2012 should be a breakthrough year for SDR.

10. Road trip: The car becomes the next battleground for usability and services. Automakers offer a screen.
Summary: Auto makers introduce better smartphone connectivity mainly using the MirrorLink standard and charging options as the handset becomes the heart of telematics and in-car entertainment.

MirrorLink will kick in during 2012 allowing easy connections from smartphone to car. (The "MirrorLink" brand replaces the bizarre "Terminal Mode" label.) Auto manufacturers will begin offering more screens to accommodate car connectivity and begin to implement standard APIs for in-car services and apps.

Other predictions for 2012: Facebook reaches one billion users but user security concerns get serious; indoor location is all over the map; Europe tries in vain to regain some of its past mobile glory; more than half a billion smartphones are sold globally during 2012; the smartphone market becomes painfully commoditized; the mobile infrastructure market gets shaken as Asian vendors challenge Ericsson for top spot; wireless operators become credit card companies; Intel has limited impact on the handset business -- again; Eastman Kodak disappears and gets picked to the bone for IPR; Shake-up at Microsoft as Steve Ballmer takes a new role; iOS replaces Mac OS on some laptops.


Dipankar said...

Did #6 just come true? Balmer announced Kinect for PC's in CES.

Peter Bryer: Mobile Foresighter said...

Hi Dipankar,

Kinect for the PC platform is a nice step in the right direction. (The price @ $250 is a bit high still.) Now to get the same functionality built into laptops, televisions, cars and even smartphones.

This will be fun to watch. I know MS has been hiring some talented people to push the "kinvelope."