The Idiots Guide to Acquiring New Customers

According to Heidrick & Struggles, the legacy high-priced executive search firm, the primary focus for mainstream C-level executives in 2009 is acquiring new customers, increasing retention and improving their lifetime value -- in that order.

Eighty-eight percent of the executives surveyed said acquiring new customers was important, and 87 percent said the same about customer retention. Least important on their list of priorities were improving marketing's impact on shareholder value, retaining talent and expanding to new geographies.

Apparently eMarketer believes that this makes sense in current economic conditions -- if a business is struggling, further development gets pushed to the back burner. Talent is easy to come by when unemployment is high, and if sales increase, shareholder value will naturally follow.

However, they wonder if the lingering question is, how to increase sales in this environment? Please, hold the laughter. This is serious stuff.

Most significant to senior executives was optimizing the efficiency of the marketing mix across the business (including digital marketing), followed by responding more rapidly to growth opportunities and improving the consistency of marketing and sales communications.

Few respondents were "satisfied" with their own company's effectiveness. But, that had nothing to do with their lack of talent. Only 15 percent of C-level execs were "very satisfied" with their optimization of the marketing mix, 14 percent with the speed of their response to growth opportunities and 11 percent with their ad efficiency in online media.

When it came to selecting which tactics were key in achieving growth objectives, research and analysis on return on marketing investment (ROMI) topped the executive's list.

Next was Web analytics. Third came customer relationship management tools such as Salesforce.com, followed by customer acquisition tools such as search engine optimization (SEO).

According to chief executives surveyed, getting new customers in a downturn might not be about working harder -- so much as getting smarter. Again, smart is a relative term, when you're a CEO with an apparent lack of marketing talent within your organization.

GSM Still Dominates Mobile Phone Networks

GSM-HSPA has captured 72 percent of the entire cellular market in the Western Hemisphere. This represents a 6 percent increase in market share since the first quarter of 2008, according to Informa Telecoms & Media.

With nearly 555 million subscriptions in the Americas at the end of the first quarter of 2009, GSM achieved an annual growth of 25 percent, adding 110 million new connections in 12 months.

On a global basis, GSM and UMTS-HSPA added 680.7 million subscriptions in the year ending March 2009, representing 89 percent global share of market and annual growth of 22 percent.

There were 4.16 billion wireless mobile connections worldwide at the end of the first quarter of which 3.7 billion are GSM-HSPA connections.

Informa reported 329 million UMTS-HSPA subscriptions as of March 2009, already 8 percent of the global wireless market. This number will exceed 474 million by the end of 2009, and one billion in the year 2012.

There are 284 commercial UMTS-HSPA networks today, including four operators who have already deployed HSPA+ with peak theoretical throughput speeds of 21 Mbps on the downlink.

The Latin America and Caribbean region is showing significant growth as the GSM market share nears 90 percent -- a 6 percent increase over the last 12 months.

The GSM family of technologies added 99 million subscriptions in the Latin America and Caribbean region as of March 2009, with the total subscriber base of 428 million for GSM-HSPA.

Broadband Digital Home Network Evolution

By 2013, the average household will have 2.5 times as many digital media devices -- computing, gaming, stationary digital consumer electronics, portable and mobile wireless devices -- in use as compared with 2008, according to the latest market study by In-Stat.

Accompanying this adoption will be a rise in the number of these devices that are network-enabled, leveraging various wired mediums and wireless technologies, like coax, phone wiring, powerline, Ethernet, and Wi-Fi.

Networking over wiring that already exists in homes is becoming increasingly important. This is particularly the case among broadband service provider entertainment networks that connect set-top boxes together and to residential gateways.

"Over the next few years, service providers will drive the growth of in-home networks" says Joyce Putscher, In-Stat analyst.

Digital media entertainment networks tie set-top boxes together, enabling additional services, such as whole-home DVR. Providers will encourage more PC home networks by replacing modem-only households with residential gateways -- CPE devices that include additional features and access to new value-added services (VAS).

In-Stat's market study found the following:

- Two segregated home networks (HN) have been evolving -- a service provider-centric network, and a PC-centric network. Each is leveraging different business models and technologies.

- While consumers want to be able to move content and services between the two types of networks, both technical and business model barriers will continue to stand in their way.

- Average PC home network throughput will rise by more than 70 percent from 2008 to 2013.

- Nearly two thirds of consumer respondents from In-Stat's survey expressed an interest in watching Internet video on their TV.

- Thus far, most service provider deployments using MoCA and HomePNA have been in North America, in terms of volume.

Upside for Mobile Marketing and Advertising

Like most segments of the mobile phone services industry, the Asia-Pacific region leads the world in mobile marketing and advertising. Accelerating growth will see nearly $7.7 billion -- and more than $16 billion globally -- spent there in 2011.

"Spending on mobile marketing and advertising in 2009 worldwide is at least flat compared to 2008 if not slightly growing," says ABI Research senior analyst Jeff Orr.

That's very encouraging compared to the numbers for advertising in most other media. It's less money per campaign, spent more intelligently, with greater benefit per dollar.

Why has mobile marketing and advertising been more widely adopted in some Asian countries than elsewhere? Particularly in the most broadband-enabled countries -- Japan and South Korea -- SMS text messaging, the downloading of ad-supported games and applications, and the mobile web were adopted widely and quickly by consumers.

People understood how to use these services and rapidly built them into their lifestyles. Add a cultural predisposition to becoming a fan of the latest popular trends, and you have a consumer receptive to mobile marketing.

Orr notes that successful mobile marketing demands a new way of thinking about ad campaigns. "Mobile advertising is intrinsically more targeted than ads in conventional media or even online."

It also offers much greater potential for interactivity: it's really a conversation with your customer, one that can allow the consumer to take direct purchasing action. And it offers extremely accurate measurement of campaign results.

Despite its intrinsically lower campaign cost, however, even mobile advertising is not immune from the recession. If an advertiser had mobile in their experimental budget, then it has been cut. But if mobile was already an established part of the marketing mix, spending has been maintained or even increased for 2009.

Global Mobile Entertainment Service Market

Mobile entertainment services have evolved since the introduction of mono-ringtones in the late nineties, with mobile carriers now delivering diverse services such as streaming audio and video, multi-player games and mobile gambling across high speed networks on to advanced handsets.

According to Portio Research, in 2008 mobile entertainment services (including mobile music, mobile games and mobile video services) generated worldwide revenues of nearly $24 billion, and this will rise to a market value of $47.2 billion by 2013.

Mobile music continues to be the dominant component of the mobile entertainment services pie, however, within mobile music, and ringtones have gradually given way to advanced services, such as ringback tones, streaming audio and full-track downloads.

Worldwide mobile music revenue stood at $11.7 billion at end-2008 and is forecast to hit $19.2 billion at end-2013.

Mobile games have also shown strong growth recently and will, in all probability, become as big as mobile music in the years to come. With different options, such as Java, BREW, SMS-based or Browser-based games, mobile gaming has evolved beyond recognition since Nokia launched Snake back in 1997.

The value of the worldwide mobile gaming reached $5.5 billion by the end of 2008 and we predict it will grow to $9.8 billion by year-end 2013.

Mobile video services are expected to grow rapidly in the years to come. Detractors of mobile video have previously cited poor handset quality as one of the biggest reasons why these services are yet to take off.

However, with the launch of more viewer-friendly handsets, such as the iPhone, mobile video services are expected to quickly gain popularity. We forecast that worldwide revenues from mobile video will nearly triple to reach $18.2 billion by 2013, up from $6.7 billion in 2008.

For the most part, paid-for mobile graphics are gradually disappearing from the scene, largely owing to the growth of handsets with camera and video capabilities, and the preference for user-generated content.

Conversely, the mobile gambling market is projected to grow significantly in the near future, and will be a big business driver for MNOs -- Europe alone is expected to generate $3.2 billion in annual revenue by 2010.

Worldwide Microwave Equipment Trends

Infonetics Research released its microwave equipment market size, market share, and forecast report. The report tracks access and backhaul/transport PDH/SDH microwave equipment and Ethernet and dual Ethernet/TDM microwave equipment.

"The big trend in the microwave equipment market is the transition from TDM to Ethernet. Microwave enables mobile operators to make phased upgrades of their backhaul networks from TDM-only to hybrid TDM/Ethernet systems to packet-based all-Ethernet solutions in the future, said Richard Webb, Infonetics Research analyst.

This offers a scalable and cost-effective roadmap for managing the escalating bandwidth demands driven by the mobile broadband boom, and future 4G deployments.

Typically, operators will keep legacy TDM microwave for another 5-10 years to support 2G/3G voice while deploying Ethernet for growing volumes of data traffic.

The Infonetics market study highlights include:

- Worldwide microwave equipment sales hit $4.9 billion in 2008, up 23 percent from the previous year.

- Despite a tough macroeconomic climate, mobile operators continue to invest in mobile backhaul to accommodate rapidly rising mobile broadband traffic -- the primary driver behind strong microwave equipment market growth.

- Dual TDM/Ethernet equipment makes up the bulk of microwave backhaul equipment, enabling mobile operators to continue to support TDM for voice traffic and simultaneously leverage the higher capacity capabilities of Ethernet to manage the exponential growth in data traffic.

- Microwave is increasingly used as an access technology in developing countries where there is more frequently a dearth of viable wireline access alternatives for enterprises and organizations with growing bandwidth needs.

- A secondary technology trend of the microwave market is the transition from point-to-point (P2P) to point-to-multipoint (P2MP) architectures, which enable cost-saving benefits.

B2B Magazine Publishers are Still in Tailspin

According to eMarketer, when the American Business Media (ABM) Annual Conference was held recently in Amelia Island, Florida, most of the speeches were optimistic.

Reviewing the financial performances of business-to-business (B2B) publishers in print, online, events and data from 2006 to 2008, Richard Mead, managing director of The Jordan, Edmiston Group, said, "This has all been part of a controlled evolution."

That's a little like saying driving a car off a cliff is all part of a controlled stop. With equal denial of recent industry performance Gary Fitzgerald, CEO of Meister Media Worldwide and chairman of the ABM, said, "It's a time of great opportunity."

Unlike the spoken words, however, eMarketer says that the data presented at the conference was more sobering. According to the ABM, B2B media ad pages declined 30 percent in the first two months of this year. And last year was not good, either.

Looking first at the B2B publisher's largest source of revenues, print, the ABM found display advertising was down 9.9 percent from 2007 to 2008, and classified advertising was down 16.9 percent over the same period, for a net ad revenue loss of 10.2 percent.

Total print revenues were off 7.7 percent to slightly over $1.2 billion.

The online revenues of B2B publications have shown steady growth. Of the six B2B media company revenue categories tracked -- magazines, custom publishing, data, online, trade shows and conferences -- online revenues showed the strongest growth, increasing 15.1 percent in 2008 to reach $360 million.

Many of the media executives at the conference were apparently focused on digital media and generating more revenues from Internet initiatives.

Growth for PC Accessories and Peripherals

The U.S. market for PC accessories and related peripherals, software, and services continues to represent a substantial opportunity for PC vendors, independent software developers, peripheral makers, and critical component suppliers.

IDC's third annual survey confirms that, within the first 12 months of making a PC purchase, U.S. consumers over the age of 18 spend an average of $0.87 on additional PC-related purchases for every $1 dollar they spent on a PC.

Small businesses with less than 100 employees spend an average of $284 per PC on other products and services that enhance usage and productivity, while securing their computing environment.

On the consumer side, the most common product category purchased is software, for both desktop and notebook buyers, with a majority of respondents purchasing anti-spam and/or security software.

Over half of survey respondents tend to buy accessories in retail stores at the time of purchase, with the second most common choice being retailers' own online websites absorbing 20.4 percent of the buyers.

On the small business side, top products in popularity terms are office productivity software, anti-spam/security software and storage products. The most common choices bought at retail are hardware devices, while software is most commonly purchased online.

The largest portion of the small business budget for accessories is spent at the time of the purchase, while another 26.2 percent of the overall budget is spent within three months of the PC purchase.

IDC also notes that for PC purchases, small business buyers acquire the majority of their desktops as replacements for existing desktops, while most notebooks are additional PC purchases.

The estimated size of PC-related purchases in the transactional market, excluding the PC itself, is $18.8 billion this year (2009) and that is the low end of the potential range.

Evolving usage models are what drive consumers and businesses to spend on such products, not only to secure their computing environment and guarantee privacy, but to also enhance their PC usage experience with the appropriate set of accessories, services, and software.

IDC's survey has been conducted over the past three years to assess the size of the PC basket. Among the variables covered are nearly 60 product types, time of purchase, budget spent on each product, brand selected, and channels of purchase.

Comparisons Between Youtube and Hulu

Nielsen Online announced that YouTube continued to rank as the number one video site with 5.5 billion total streams in April. Meanwhile, Hulu continued its explosive growth, increasing 490 percent in total streams year-over-year, from 63.2 million in April 2008 to 373.3 million in April 2009.

"Historically short form, clip-length video has ruled streaming on the Web -- as demonstrated by YouTube's top spot month after month. Hulu, along with pure-play providers like Veoh and the TV networks, have spent the past two years trying to convince consumers that the Internet can be a good place to watch full length programming as well. April's strong showings of Hulu, Fox, and ABC suggest that consumers are beginning to listen," said Jon Gibs, vice president at Nielsen Online.

In April 2009, people between the ages of 35 and 49 were the fastest growing demographic in time spent viewing per viewer, increasing 29 percent during the past six months. This was 13 percentage points higher than the growth of time spent viewing per viewer for the overall market, which increased 16 percent over the same 6-month period.

Despite what many believe, it is not the young, tech-savvy, early-adopters who are attracted to long-form video. In fact, it's the older crowd, viewers 35+, who gravitate toward long-form video, with sites like Hulu acting as a perfect example of this.

And advertisers are paying attention. They see long-form video sites like Hulu as a safe bet for online advertising, recognizing that their key audiences are there and more willing to sit through an online advertisement while watching a favorite show, much as they do with the TV.

In April 2009, three of the top five sites -- Hulu, ABC.com and NBC.com -- ranked by time spent viewing among people 35 to 49 were sites with long-form video. Compared to six months ago, only one of the top five was a long-form video viewing destination.

Since its inception Hulu has experienced meteoric growth in all aspects of video viewing, especially in time spent. Total time spent viewing increased 119 percent between November 2008 and April 2009.

As more people frequent Hulu and stream more videos, more time is also spent watching these videos. Time spent viewing per viewer increased 120 percent, from 147 minutes in November 2008 to 325 minutes in April 2009.

Hulu unique viewers between 35 and 49, in April 2009, represented 30 percent of total Hulu viewers. They also spent more time than any other age group, with an average of 416 minutes per viewer during the month -- 10 percent more than any other demographic group on Hulu.

During the past six months, time spent per viewer for the 35 to 49 demographic group has increased 154 percent.

Consumer Network Attached Storage Market

Home computer users save more data than ever before. The phenomenal growth of digital photography, audio, and video has focused consumer minds on the secure storage of their pictures, music, and movies -- raising the profile of backup and media server solutions.

Although most consumers still rely on single-computer backup scenarios, a small but growing number are opting for Network Attached Storage (NAS). While the market is still relatively small, consumer NAS is expected to deliver more than $1.25 billion in revenues by 2011.

"In order to move the consumer NAS market forward," says ABI Research senior analyst Jason Blackwell, "vendors, including leaders, need to educate and inform consumers about NAS advantages."

Consumer NAS equipment falls into three groups:

- Integrated NAS drives, which include the necessary networking software.

- Network storage enclosures, for those who wish to add the hard disk themselves.

- Storage routers and bridges, which allow attachment of standard USB or IEEE 1394 hard drives to a network.

Integrated NAS drives comprise the majority of the market. But, storage routers and bridges offer vendors the greatest growth opportunity.

Challenges in this market have traditionally included consumer's relative indifference to data security: backups have always been considered a pain. Cost has been an issue too: while prices continue to fall, they still pose a barrier to further adoption.

The rise of the home media server market, however, will provide some lift -- DLNA and UPnP-enabled NAS devices can act as media servers and are being branded as such. The fact that NAS devices are becoming more like media servers will certainly help them penetrate the digital home network.

Vendors are making a concerted effort to market NAS for these more exciting purposes rather than simply for backup. In my opinion, improved usability is the key differentiator.

Mobile Broadband Helping Service Providers

Over 15 percent of revenues generated by mobile operators globally came from non-voice services in 2008. According to the Informa Telecoms & Media market study, actual revenues comprising data services reached $188.7 billion in 2008, representing a 24 percent year-on-year increase.

"This is an important finding" commented Informa principal analyst, Nick Jotischky, "as non-voice services are becoming a central plank to mobile operator strategies at a time of increasingly high penetration rates, low voice tariffs and intense competition."

Not only can data services help to keep the offerings of mobile operators more relevant and distinct from their competitors, but they can also help to raise ARPU levels and generate new customers.

Looked at regionally, there is a considerable disparity in the significance of non-voice revenues -- at the top end, just over a fifth of the total $192.8 billion revenues generated by mobile operators in North America in 2008 comes now from non-voice services, as opposed to 5 percent of the $71.1 billion revenues from mobile operators in Africa.

The majority of the $188.7 billion of non-voice revenues are still SMS-based, but at the end of 2008, $75.1 billion (40 percent) of this revenue was from non-SMS services. The deployment of advanced technologies (such as HSPA) and the growing demand for data-optimized devices such as Apple's iPhone have helped to accelerate the level of non-SMS spend.

The advance of mobile broadband has been a key feature of the telecommunications industry in the past year with Informa putting the total number of subscriptions at 178.2 million at the end of 2008.

This represents extraordinary growth given that Verizon, the largest operator in terms of mobile broadband subscriber numbers (24.245 million), only registered its first such subscribers at the end of 2004.

Given that it took the best part of 15 years to register the first 178 million mobile subscribers globally, this represents a rapid evolution path for mobile broadband.

There are some warning signs, however, for the global mobile industry. There appears to have been a slowdown in data revenues reported by operators during the fourth quarter of 2008. While, some of this can be explained away by currency fluctuations, there is a question over whether the global economic downturn has left its mark.

"Globally, data revenues remained flat in the fourth quarter at just below $49 billion," Jotischky comments, "and the fear is that global macroeconomic conditions have had an impact on discretionary consumer spend, and especially in North America and parts of Europe."

If this trend continues into 2009, there is a real danger that any slowdown in non-voice usage will have an impact on mobile operator business strategies.

How Wi-Fi Became the Disruptive Enabler

While mobile PCs and portable consumer electronic (CE) devices comprised the majority of Wi-Fi chipset shipments in 2008, mobile handsets and stationary new CE categories are driving the market growth, according to the latest market study by In-Stat.

In 2008, Wi-Fi chipsets in mobile handsets grew by more than 51 percent. By 2010, In-Stat anticipates that this category will exceed 20 percent of the total Wi-Fi semiconductor chipset market.

"A new segment of Digital Media Adapters (DMAs), over-the-top devices, is also generating a lot of attention," says Victoria Fodale, In-Stat analyst.

Independent over-the-top (OTT) devices access third-party home entertainment services that are delivered across a broadband network -- typically with no affiliation to a specific broadband service provider.

These emerging OTT video devices include Apple TV, the Netflix player by Roku, and the Blockbuster 2Wire Streaming MediaPoint box.

This is a growing segment to watch, as it disrupts the traditional pay-TV business model -- particularly in trailing markets such as North America, where subscription prices are still very high.

In-Stat's market study found the following:

- Total Wi-Fi chipset revenue will pass $4 billion by 2012.

- The Apple iPhone garnered a lot of attention in the handset category, but Nokia and HTC led in Wi-Fi-enabled handset volumes.

- The strong success of new netbook devices is boosting growth in the computing segment.

- 802.11n will surpass 802.11g in the stationary CE embedded chipset segment in 2010.

- New Bluetooth 3.0 specification uses 802.11g technology for the physical layer, which could open up a new market for Wi-Fi chipset suppliers.

Legacy Ad and PR Agency Customer Exodus

Marketers worldwide are shifting their budgets into cheaper, more measurable categories. In most cases, that means online marketing. Meanwhile, traditional advertising and PR firms use their industry associations to spread FUD that new methods aren't effective.

Regardless, these legacy firm's concerted smear campaign is clearly failing to stop the continued exodus of even their most loyal customers.

In a survey by the Society of Digital Agencies (SoDA), 81 percent of respondents said they plan to invest at least as much in digital marketing in 2009 as in the previous year.

Ironically, more than 77 percent of traditional advertising agencies are increasing the amount of digital in their budgets by 1 percent to 29 percent. And over 10 percent are upping online budgets by 30 percent or more.

In addition, about 15 percent of digital agencies, digital service providers and freelancers plan to increase digital budgets by 30 percent or more. Brand agencies were least likely to add to digital budgets, with one-half planning no shift at all.

When asked if they were doing more digital work in the wake of the economic downturn, at least 36 percent of advertising professionals of all stripes said yes, and many expect to take on significantly more.

"The economic crisis will accelerate the shift of focus and importance from traditional media to digital media," wrote SoDA analysts. The SoDA findings are backed up by an earlier survey from Ad Media Partners, which found executives planning to increase digital spending from search to banners.

The combination of accountability, convergence and the infusion of digital media into every facet of life makes the future look bright -- for marketers making the move to digital marketing. In contrast, the mixed messages from traditional Ad and PR firms merely assures their continued decline.

IT Virtualization Reaches Key Inflection Point

IDC investigated the adoption of IT virtualization in Europe and confirmed that this technology is significantly impacting the server market, and even more so the way that data centers will be built and managed.

The market study showed that the number of server systems shipped with a virtualization platform on top has increased by 26.5 percent in 2008 compared to 2007, reaching 358,000 units in the Western European countries.

"The accelerated adoption on the x86 side of the server market is making virtualization a crucial factor, changing the approach of suppliers and the deployment habits of customers throughout Europe," said Giorgio Nebuloni, research analyst at IDC.

"In 2008, approximately 18.3 percent of all servers shipped in Western Europe were virtualized, against 14.6 percent in 2007, and we expect the percentage to grow to almost 21 percent in 2010. More importantly, last year, and for the first time ever, the number of virtual machine (VM) shipments exceeded the number of physical servers shipped, topping 2 million units."

The drop in hardware spending will lead to a break point in 2009, as VM shipments will be more than 10 percent higher than physical server shipments. In 2013, the ratio between virtual and physical server shipments will be 3:2 on average.

In parallel, the number of logical machines (physical and virtual) shipped is expected to grow strongly, and IDC projects they will increase by 15.7 percent through 2013. This makes management tools more and more pivotal, as both virtual and physical servers have to be operated, monitored, and patched.

"We believe the current economic crisis to be increasingly intertwined with virtualization adoption, as the combined need to squeeze costs with the existing assets and the weak demand for new hardware are accelerating its technological impact within customer installed bases," said Nathaniel Martinez, program director at IDC.

The disruption is becoming visible on the supply side as well, as server design shifts toward virtualization friendly architectures in specific segments and new players enter the marketplace, attracted by the revenue potential linked with a fully virtualized x86 server stack.

"Along with the well-known benefits, virtualization presents potential challenges. Being so quick and straightforward, the deployment of virtual machines can generate sprawling environments, where IT managers lose visibility on the amount of VMs and on their actual utilization," said Nebuloni.

IDC says the set up of operative procedures for virtualized environments requires an integration within the existing legacy infrastructure. Also, in many cases new practices will have to be put in place, responding to the increasing overlap in the areas of responsibility of the IT staff.

This creates a market opportunity for managed and hosting service providers to evolve towards new and enhanced cloud service offerings.

In related news this week, Cisco Systems launched the Unified Service Delivery solution for broadband service providers. It's described as the pathway to cloud services.

Entertainment Sector Hopeful 3D Will Prosper

Ready or not, 3D is coming with backing from all major sectors of the entertainment and consumer electronics industries. 3D movie production is intensifying, cinemas all over the world are investing in 3D technologies and feedback from audiences has been highly positive.

Yet the ultimate goal is to bring 3D to the home, and a Futuresource Consulting market study reveals studios, consumer electronics companies, broadcasters, video game vendors and network operators are all poised to promote 3D.

"Consumers are starting to experience the new wave of 3D technologies at the cinema and through Digital Out of Home advertising, and it won't be long before there's a groundswell of demand for 3D within the home," says Sarah Carroll, Director at Futuresource.

With over 200 million new TVs sold across the globe every year, the potential is huge, but the industry needs to overcome some serious obstacles in order to kick start and fully realize the revenue streams.

Most notably, technical and standards issues still need to be resolved and there is a limited supply of 3D content, with the current economic climate making new investment in production and distribution a challenge, particularly for the broadcast industry.

All eyes will be on the consumer electronics industry, with 3D-Ready television a prerequisite to consumer adoption in much the same way as HD-Ready sets were used to seed the high definition market five years ago. An early decision on the Blu-ray 3D standard will also be critical, as packaged media will be necessary to help drive the market.

Custom chipsets can be embedded into next gen hardware at relatively low cost. Combine this with an integrated consumer awareness program and a coherent 3D-Ready branding strategy, and the resulting price premium on hardware will more than offset the additional manufacturing costs.

"Our analysis points to the emergence of two distinct phases as we move through the diffusion curve," says Jim Bottoms, Managing Director at Futuresource. "Currently, we're easing into the preparatory phase, which will stretch out to 2011. Here we'll see 3D movies primarily being made for theatrical release and the continued rollout of 3D digital cinema."

TV manufacturers will start to roll out multi-format 3D-Ready sets and glasses from 2010, VoD delivery systems will begin to include limited 3D movie, concert and sport content, and the market for 3D PC games will continue to develop.

Upside for Mobile Rich Communication Suite

Infonetics Research released the results on a new market study which tracks Rich Communication Suite (RCS) service revenue, subscribers, mobile phones and user clients.

In a world where mobile communications is quickly evolving, all service providers need to continue driving voice and data usage while enriching the overall communications experience.

RCS aims to unify the communications experience by integrating presence, voice, chat, and multimedia services seamlessly to the user. It is an attractive opportunity considering the total available market of 1 billion worldwide 3G subscribers that will exist in 2010.

However, the success of RCS hinges on a number of factors, including operators achieving service interoperability and native integration of RCS in mobile devices.

"If done right, though, service providers will be able to tap into increased revenue streams from services and applications, particularly mobile broadband, text messaging, and data services," said Diane Myers, Infonetics Research analyst.

Highlights of the Infonetics market study follow:

- By 2010, the first full year of RCS availability, Infonetics forecasts there will be 1.3 million RCS subscribers, mostly in Western Europe, the rest in Asia Pacific.

- RCS subscriber growth is expected to ramp quickly across Europe and Asia, and spread to North America and Central/Latin America by 2013 as RCS becomes more widely available on 3G devices and mobile operators achieve interoperability.

- The core feature sets of RCS include enriched calling (sharing videos, images, and other multimedia during a voice call), enhanced messaging (e.g., multimedia, chat, and file transfer messaging), and the enhanced phonebook, which adds service capabilities to the mobile phone network address book, or NAB.

- The network address book will play a pivotal role in the success of RCS; future capabilities such as auto-populating from diverse sources (LinkedIn, Facebook, MS Outlook, etc.) will enable increased communications across multiple media.

Consumers Join Mile High Broadband Club

There's a new mile high club, where people access the Internet from their passenger seat in a jet plane. The number of broadband enabled airplanes will increase from 25 in 2008 to 800 in 2009, according to the latest market study by In-Stat.

As a result, broadband ready airline passengers will generate over $47 million worldwide in 2009. The in-flight broadband market is still emerging and will grow well beyond $1 billion annually by 2012.

"The market is clearly gaining momentum, with deployments escalating in number," says Daryl Schoolar, In-Stat analyst. "However, in-flight broadband faces challenges, however, by the struggling economy and competing non-traditional IFE solutions."

Live broadcast video is also poised for significant growth in 2009. While this service is more established than in-flight broadband, usage revenues are still anticipated to nearly double in 2009 and continue to grow strongly through 2013.

In-Stat's market study found the following:

- In-flight broadband equipment revenue will nearly double between 2009 and 2013.

- Competing providers of include Aircell, Panasonic and Row44.

- In-Stat forecasts over 200 million annual in-flight broadband connects by 2013, with long-haul connects dominating over short-haul connects.

- Connections from handheld devices will account for about 1/3 of connects, with notebook computers accounting for 2/3.

VoIP and Unified Communications Services

Infonetics Research released the first of its biannual VoIP and Unified Communications (UC) services and subscribers reports, which now tracks SIP trunking, IP integrated access, and hosted UC in addition to residential VoIP, VoIP VPN/IP access, IP Centrex and managed IP PBX.

Demand for residential and business VoIP services continues to grow through the economic downturn because of the cost savings they provide. As a result, in 2008 the VoIP services market had healthy growth of 33 percent to $30.8 billion.

For the first 3 months of 2009, service providers experienced an average of 40 percent to 50 percent year-over-year growth for IP Centrex, indicating the demand for outsourcing and managed solutions remains healthy.

"We expect hosted UC services to take off, with worldwide revenue doubling between 2009 and 2013, and we forecast SIP trunking service revenue to hit an 89 percent compound annual growth rate from 2008 to 2013," said Diane Myers, Infonetics Research analyst.

Highlights of the Infonetics market study include:

- While residential VoIP services make up the bulk of VoIP service revenue, business VoIP service revenue growth outpaced residential in 2008.

- In 2008, managed IP PBX and hosted IP Centrex/hosted UC revenue together accounted for nearly three quarters of all business VoIP service revenue; IP connectivity service revenue made up the balance.

- NTT, France Telecom, and Comcast took the lead as the world's largest VoIP service providers in 2008.

- Deregulation plays a significant role in the adoption of VoIP in some countries, such as France, where it costs only $0.02 per minute for fixed-to-fixed line calls worldwide.

- Residential VoIP growth in Central and Latin America has grown stronger in the past year, particularly in Brazil where Embratel ended 2008 with 1.8 million subscribers to its NetFone service.

- In 2008, there were 106 million residential VoIP subscribers worldwide, the majority in EMEA and Asia Pacific, where competitive operators and incumbent carriers are in an aggressive battle for subscribers.

Consumers now Watch Online Video on TV

Just imagine what it would be like to watch online video content on your television. Well, a segment of mainstream American consumers has already moved beyond their imagination.

The under-35 adult population in the U.S. has already adopted Web-to-TV video capability, according to the latest study by In-Stat.

Over 40 percent of young adult U.S. households view Internet video on the TV at least once per month. On the upside, revenue from Web-to-TV streaming services will grow to $2.9 billion in 2013.

"Once Web-to-TV video becomes simple and convenient, mass consumer adoption will follow quite rapidly," says Keith Nissen, In-Stat analyst. "Our primary research shows that users want a variety of their consumer devices to enable a web-to-TV video experience."

In-Stat's market study found the following:

- Within five years, the number of U.S. broadband households viewing Web-to-TV content will grow to 24 million.

- Already, 29 percent of U.S. 25 to 34 year olds with game consoles use the devices to watch streaming video off the Internet.

- In five years, there will be 7.4 million U.S. broadband households that use media center PCs for streaming Web-to-TV content.

- TV networks and pay TV operators currently view online TV as additive to pay TV services, but Web-to-TV will ultimately force a complete restructuring of today’s video services.

- Video content will be optimized for broadcast or Web-to-TV based on content type.

British Bonding on Social Network Sites

Do the Brits "socialise" everything? Apparently, they're on social networking sites, they're British. eMarketer estimates that 39 percent of UK Internet users -- more than 15.4 million people -- will use social networks at least once per month in 2009.

And growth will continue, though at slightly slower rates after 2010. By 2013, the social networking population in the UK will reach 21.9 million and represent 50 percent of Internet users. IMHO, it's all those friendly cockneys from London. Alright, mate?

"Most early adopters of social media in the UK were young and male," says Karin von Abrams, eMarketer senior analyst. "And while older users -- especially those ages 65 and up -- still lag in social media usage, the appeal of Facebook and the spread of professional social networking among UK employees are boosting adoption in other age groups."

The all-important user group, UK women, is also warming to social networking, forums and blogging.

The 2008 "Digital World, Digital Life" survey by TNS provided a detailed snapshot of UK Internet user's activities online during the year.

To no one's surprise, searching, banking and catching up with the news and weather were among the most common online British pursuits. But various forms of social media also attracted significant audiences.

According to TNS, 37 percent of UK adult Internet users polled had visited a social networking site in the previous month, while 29 percent had viewed or contributed to an online forum, and 26 percent had visited or posted a comment on a message board.

Fewer than one in five had visited or added to a wiki (19 percent) or a blog (16 percent), or checked into a chat room (13 percent). Just 10 percent said they had visited a business networking site.

In its "Communications Market 2008" report, the UK Office of Communications (Ofcom) noted a higher percentage in the number of users engaging in various forms of social media over a three-month period -- compared with the one-month period referenced by TNS. Overall, 51 percent of UK Web users polled said they had been active in social networking or other collaborative activities.

Many online social activities -- such as social networking, blogging and content-sharing -- are blurring to some extent, especially as major social networks provide more functionality to integrate these strands of communication.

At the same time, these behaviors are often distinct in Britain. They can attract different audiences and are still measured separately by many research firms, so it is useful to look at them one by one.

Mobile Phones Suffering from Weak Demand

The worldwide mobile phone market began 2009 with an expected sequential downturn, fueled by the ongoing worldwide recession. According to IDC, handset vendors shipped a total of 244.8 million units in the first quarter of 2009, approximately 15.8 percent lower than the 290.8 million units shipped during 1Q08.

The first quarter of a new year is typically characterized by seasonally lower shipment volumes. However, the 1Q09 decline was especially sharp due to weak end-user demand, currency volatility, and lack of credit for merchants as consumers and the supply chain adapt to the recession.

"That the worldwide mobile phone market started off 2009 with a year-over-year decline highlights just how much the economic recession has affected all industries, including the wireless market," says Ramon Llamas, senior research analyst with IDC.

The market continues to adapt to the new economic reality with both vendors and retailers exercising caution to remain profitable. In some cases, this has meant holding less inventory, or even reducing headcount.

Fortunately, new features and demand for phones will help the market resist the financial pressure. IDC expects to see further year-over-year declines worldwide, even as some regions show signs of improvement.

As the overall market dropped 15.8 percent in 1Q09, smartphones continue to grow year on year at 4 percent. Growth within this segment was evident in Western Europe, North America, and Asia/Pacific (excluding Japan). Mobile operators have become progressively more open to raising subsidies within this segment as dependence on data revenue has increased as a result of reduced consumer demand for new handsets.

"Creativity appears to be the key to success for large mobile operators during this tough time as changes to business practices from past years have become necessary," says Ryan Reith, senior research analyst with IDC.

"Some of the big operators in mature markets have shifted product portfolios, and some have smartphones accounting for as much as 50 percent of the entire handset offering. We believe this strategy will continue, along with an increase in devices that are media and messaging centric, to help operators maintain revenues."

Wi-Fi to Dominate HD Video Home Networks

Digital home networks will be optimized to distribute video. Standards based 802.11n Wi-Fi technology will dominate the wireless High Definition (HD) video market, at least for the next several years, according to the latest study by In-Stat.

Three other connectivity technologies are competing in this space -- Wireless Home Digital Interface (WHDI), WirelessHD, and Ultrawideband (UWB). However, the ubiquity of Wi-Fi technology is proving unstoppable.

"802.11n is the next generation of the immensely popular Wi-Fi family. It promises data rates above 100Mbps and is backwards compatible," says Brian O'Rourke, In-Stat analyst.

The installed base of Wi-Fi is immense, and effectively includes all mobile PCs, many mobile phones and a wide variety of CE devices. The primary drawback to 802.11n is expense, since it requires codec technology on both ends to transmit HD video. Neither of its primary competitors, WHDI and WirelessHD, requires codecs.

In-Stat's market study found the following:

- UWB will not be a major factor in the consumer electronics market. Many chip companies are leaving the market in late 2008 and 2009.

- Nearly 24 million digital TVs will ship with some type of Wireless HD video technology in 2013.

- WHDI and WirelessHD are being promoted by startups, but they are new, expensive, and power-hungry, which is generally not a recipe for quick market success.

Upside for Connected Consumer Electronics

Consumer demand for digital media and online content will push worldwide annual sales of connected consumer electronics (CE) to more than 100 million units by 2013, according to the lates study by Parks Associates.

The market for connected CE includes networked TVs, Blu-ray players, game consoles, home media servers, and set-top boxes. Through network and Internet connections, these devices can access and display home network content such as photos and music and retrieve online content such as widgets, games, and video from Hulu and YouTube.

"Key consumer trends are aligning to drive this market," said Kurt Scherf , vice president, principal analyst, Parks Associates.

People want whole-home access to their personal content, which will increase the storage needs of the average U.S. household to a terabyte. At the same time, consumers are very interested in bringing Internet content to the television.

For devices to offer a compelling value proposition, they will have to feature connectivity within the home network and to the services coming to the home. Diverse user scenarios create multiple challenges for technology developers, according to Scherf, including interface design as well as connectivity.

"Connected CE use cases will include access to many different services and types of content, including video, gaming, user-generated content, music, social networks, and customer care," Scherf said.

Interface design will be an important area as users will need easy access to their content and services. Simplicity by design -- a lasting point of differentiation -- removing the complexity from both device configuration and operation.

Pay-TV Growth Slows as OTT Video Rises

Pay-TV subscribers are expected to grow by 8 percent in 2009 to reach nearly 733 million worldwide despite the challenging economic environment, according to the first quarter market update from Pyramid Research.

Considering the current estimates of a 6 percent decline in global nominal GDP during 2009, the adoption levels for pay-TV services will undoubtedly hit a speed bump worldwide, with year-over-year growth rate declining to 8 percent from 11 percent in 2008, notes Ozgur Aytar, research manager at Pyramid Research.

Lower double-digit growth rates expected across the emerging regions coupled with the stabilizing effect of multi-play bundles and their increasing penetration particularly in mature pay-TV markets should, however, prevent the global subscriber base to take a nose dive.

"We started the year with a great sense of uncertainty of the impact of the economic downturn on the pay-TV market, and while much uncertainty remains, pay-TV operator's first-quarter results published to date have not been so bad after all. Most continue to add subscribers, and those that are losing customers are doing so largely as a result of the entry of new competitors," says Aytar.

The more significant impact of the recession will be felt in customer spending on pay-TV services in 2009, as operators have increasingly been rolling out lower economy pay-TV and multi-play bundle fees to respond to mounting customer demand for less expensive services and to retain subscribers.

By Pyramid estimates, average expenditure per pay-TV household will decrease by 6 percent in 2009 worldwide and by as much as 20 percent in some of the emerging markets.

Cable TV operators are expected to generate more than half of the global pay-TV revenue in 2009. The prospects for IPTV platforms appear to be most promising across the Western European markets, where IPTV subscribers are projected to account for 15 percent of total pay-TV base by year-end.

Elsewhere, IPTV's share of subscribers will remain less than 5 percent of the total market. The slowdown in the global economy has hit both capex and the speed of broadband network deployments in emerging markets. Over the top (OTT) video adoption is yet another factor.

In order to manage through the downturn, operators are scaling back their capex by as much as 20 to 30 percent, and most are holding back on expansion plans but rather focusing on increasing operational leverage in existing markets, which in return is negatively affecting the availability of IPTV services.

Computing and CE Products Drive GPS Apps

Mobile handsets still dominate shipments of devices with integrated Global Positioning System (GPS), but the new growth will come from mobile consumer electronics (CE) and mobile computing applications, according to the latest study by In-Stat.

Mobile computing and CE devices will comprise over 100 million units in 2013.

"With growing attach rates and market maturity, GPS chipset providers must carefully evaluate which technologies to integrate into single chip solutions," says Jim McGregor, In-Stat's Chief Technology Strategist.

Integration of the RF front-end and base band processor may not be enough. For example, which radio makes the most sense to integrate with, given the single mini-card slot of PC-based platforms?

In-Stat's market study found the following:

- Although the number of devices shipping with integrated GPS is increasing, the attach rates and the devices shipments have been hampered by the faltering economy.

- By 2012, there will be more CE devices with integrated GPS shipping than there are stand alone personal navigation devices.

- Mobile computing holds a lot of promise for GPS with 26 million GPS enabled units shipping in 2013, but there are barriers. In the netbook segment for example, cost, integrating yet another antenna, only one mini-card slot will inhibit adoption.

- CPUs must be integrated (ARM, x86, Mips) to manage the host processor load.

- Infrastructure radios (802.11, WiMax, LTE) are likely candidates for integration.

U.S. Retailers Find Growth in Online Sales

U.S. economic indicators for retailers were down in first quarter of 2009, but online sales were an exception.

According to a survey by Forrester Research and Shop.org, U.S. online retail sales rose an average of 11 percent in the first three months of 2009.

Of the 80 companies studied, 58 percent saw online sales increases compared with the same quarter last year.

Looking further into the findings, 44 percent of the e-tailers reported increases of over 10 percent, 14 percent showed increases up to 10 percent, and 13 percent reported flat sales.

In the survey, about 70 percent of both consumer brand manufacturers and multichannel retailers reported online sales increases. However, Web-only merchants had a different situation. About six in 10 reported Web sales declines.

"It seems that consumer confidence is getting better," Sucharita Mulpuru, a Forrester analyst, told Bloomberg News. "Hopefully the worst is behind us."

Looking ahead, Citi Investment Research projects that U.S. retail e-commerce sales will grow 4.4 percent in 2009 to $141 billion—and jump to 16.5 percent growth in 2010.

BSPs Target Home Automation Systems

Vendors of home automation systems are expected to ship nearly 2.8 million units in 2011, according to the latest market study from ABI Research.

Only one of the four segments of this market -- that for luxury systems -- will be significantly impacted by the recession, according to senior analyst Sam Lucero.

The luxury home automation market for systems costing more than $50,000 is relatively mature, so it will feel the greatest impact from the recession.

Two other segments -- standards-based mainstream home automation systems and home automation as a service -- are so new and have so much room for growth that they should expand rapidly starting in 2010 no matter the progress of the wider economic recovery.

Likewise, the final segment -- DIY home automation -- is tied to a certain extent to these other newer segments and should also see healthy growth.

Rather, the challenges to achieving that growth are related to creation of new market mechanisms: the development of distribution channels, and the education of consumers as to the benefits and availability of home automation technology.

New standards-based wireless technologies such as ZigBee and Z-Wave mean that many mainstream home automation installations are now in the $10-15,000 range with prices falling fast.

This segment is further driven by the growing availability of peripheral components that are available not only from the vendors themselves but through retail outlets.

Most of the broadband service providers (BSPs) are trialing systems aimed at delivering managed home automation services as part of a bundled offering for subscribers. It's apparently a push market phenomenon, with service providers educating their customers about the options and possibilities.