Global Mobile Phone Service Subscriber Upside

In the last twenty years, few industries have grown as fast as the worldwide market for mobile phone services.

Having recorded a staggering 3.9 billion subscriber additions between 2000 and 2009 -- a compound annual growth rate (CAGR) of 23.3 percent -- the worldwide mobile subscriber base is forecast to increase from 4.6 billion in 2009 to 7.5 billion by 2020, according to the latest market study by Portio Research.

This subscriber growth has propelled worldwide mobile penetration from 11.5 percent in 2000 to pass 64 percent by 2009 -- and by 2020 it is forecast reach 94 percent.

Up until 2000, Europe dominated the worldwide mobile market -- in terms of subscriber numbers -- but shortly thereafter Asia Pacific replaced Europe as the world leader and has continued to remain so in terms of subscriber base.

However, now Africa and Middle East are adding mobile phone subscribers to the worldwide base much faster than any other region.

Since their 1992 launch, mobile value added services (VAS) -- a key component of mobile services worldwide -- have evolved from simple texting (SMS) to advanced functions such as mobile entertainment, payments, location-based services, e-mail and instant messaging (IM).

Despite this evolution, SMS (simple text messaging service) remains the most popular mobile VAS offering in almost all mobile markets in the world.

In 2000, 303 million mobile handsets were shipped at a worldwide level -- this figure will approach 1.5 billion by 2014. Smartphones, with their myriad features and functions, are increasingly gaining prominence in the worldwide handset market.

Global STB Market Driven by Satellite Pay-TV

In 2009, more than 100 million satellite pay-TV set-top box (STB) units were sold, which represents more than 50 percent of the total STB market for that year, according to the latest market study by In-Stat.

Cable and digital terrestrial television (DTT) STB shipments each represented slightly over 20 percent of the market, with IPTV only capturing the remaining 7 percent.

Asia is the dominant region, in terms of unit shipments, with nearly half of the worldwide total units shipped in the forth quarter of 2009.

In terms of revenue, North America continues to be the most dominant region, with over $8 billion in STB sales for 2009.

In-Stat's study covers the worldwide market for set-top boxes. This research tracks set top box (STB) unit shipments, revenues and average selling prices (ASPs) on a quarterly basis. The pay-TV operator segmentation includes Cable, Satellite, Telco IPTV, and Digital Terrestrial TV.

In-Stat's latest market study found the following:

- The most significant growth occurred in the sale of high-definition (HD) satellite STB units, with a 68 percent increase from 2008.

- Not surprisingly, the sale of standard-definition DTT units declined the most, year-over-year, by more than 15 percent.

- The total number of STB units with DVR increased by 14 percent in 2009, with the most significant growth coming from the Latin America region.

Why Consumers Still Don't Watch TV Advertising

The television attention deficit trend has accelerated -- when advertisers believe that consumers are watching, they're probably not.

Americans increased their overall media usage and media multitasking according to the latest market study by The Nielsen Company, which tracks consumption across TV, Internet and mobile phones.

In the last quarter of 2009, simultaneous use of the Internet while watching TV reached three and a half hours a month, up 35 percent from the previous quarter. Nearly 60 percent of TV viewers now use the Internet once a month while also watching TV.

"The rise in simultaneous use of the web and TV gives the viewer a unique on-screen and off-screen relationship with TV programming," said Nielsen Company media product leader Matt O'Grady.

Each week, on average, Americans watched (figuratively speaking, only paying attention sometimes) roughly 35 hours of linear TV programming and two hours of time-shifted TV via a DVR.

The growth in viewing is due to a number of factors: The DVR brings added convenience while high definition programming and flat-screen TVs have boosted the quality of the experience. Digital delivery, via cable or satellite, is delivering more channels and more choice to the home than ever before.

DVRs, now found in 35 percent of American households, continue to gain popularity. Those age 25-34 watch nearly three hours a week of time-shifted TV, while those age 65 and older watch just more than an hour.

Online video consumption is up 16 percent from last year. Of note, approximately 44 percent of all online video is being viewed in the workplace. The research shows that Americans watch network programs online when they miss an episode or when a TV is not available.

Active mobile video users grew by 57 percent from the fourth quarter of 2008 to the fourth quarter of 2009, from 11.2 million to 17.6 million. Much of this increase can be linked to the strong growth of smartphones in the marketplace.

Shoppers Search for Local Businesses Online

The two largest U.S. Yellow Pages directory publishers were bankrupt as their profitability went into a prolonged decline. Moreover, there's no relief in sight for these legacy service providers -- in fact, Google will likely further erode their revenues with a new offering that targets their best customers.

Why won't the Yellow Pages publishers recover? eMarketer reports that the overwhelming majority of U.S. Internet users research online to find local products and services, according to the latest market study by BIA/Kelsey and ConStat.

The most common online tool used for local research was search engines (Google). Less than one-half of respondents still used Internet yellow pages and 42 percent checked comparison-shopping sites before heading to local businesses.

In summer 2009, TMP Directional Marketing and comScore found that 46 percent of local online searchers contacted a business by telephone after Web research, and 37 percent visited in person.

"The Internet has indeed become an integral part of consumers' local commercial activity," said Steve Marshall, director of research, BIA/Kelsey. "The data suggest we're at an inflection point where the balance of power in local shopping is shifting to online."

Local advertising dollars will follow eyeballs -- BIA/Kelsey expects the Web to get an increasing share of local ad spending over the next several years, reaching one-quarter of the total in 2014.

Over time, the researchers have noted an increase in the number of sources used for local shopping research, suggesting audience fragmentation that can be challenging for advertisers.

According to the market study results, 58 percent of respondents said they had redeemed an online coupon when shopping locally in the past year, and 19 percent made a local appointment other than a restaurant reservation on the Web.

Pay-TV Hybrid STB Integrated with Gateways

Shipments of pay-TV set-top boxes will continue to rise during the next few years as consumer viewing patterns shift and as video delivered via the Internet becomes more popular, according to the latest market study by iSuppli Corp.

A total of 147.8 million set-top boxes will ship worldwide in 2010 -- up 11.5 percent from 132.6 million units last year. Shipments will continue to rise in the next few years and reach 193.9 million units by 2014.

The continued growth of set-top boxes coincides with projections for worldwide subscribers to Internet Protocol TV (IPTV), and over-the-top IP Video services, according to Jagdish Rebello, iSuppli senior director.

Global IPTV subscribers will increase to more than 123 million units by 2014, up from about 33 million at the end of 2009 -- rising at a Compound Annual Growth Rate (CAGR) of almost 30 percent.

"The rise in numbers in both set-top boxes and IPTV subscribers bears profound implications for consumers and OEMs, signaling a major paradigm shift in TV viewing," Rebello said.

Given the change in the way consumers watch video content, the set-top box sits at the critical junction of what industry participants call the broadband residential gateway, noted Jordan Selburn, iSuppli principal analyst.

Because of this, service providers as diverse as telephone companies, cable operators and satellite pay-TV companies are realizing that the gateway device will be the means through which they can extend their networks into the digital home.

Set-top boxes must be considered the leading candidate for residential gateway systems -- not only providing a bridge from the house to the outside world but also serving as a conduit within the home among network-attached appliances -- including telephones, digital video recorders, PCs, gaming consoles, storage devices and security systems, Selburn noted.

Already, the integration of residential CPE capabilities into set-top boxes has begun. Service providers like Iliad in France have launched the AliceBox -- a single device that integrates a TV set-top box and a broadband modem.

Other than the set-top box, however, iSuppli does not see in the immediate future any other CE device integrating the residential gateway. Video game consoles and PCs could evolve to support the role of content servers, but these devices will likely not include gateway capabilities.

More VoIP Apps and Wi-Fi in Mobile Phones

Mobile phones with embedded Wi-Fi connectivity continued to experience growth in 2009 despite total handset shipment declines, according to the latest market study by In-Stat.

While the 2009 Wi-Fi mobile handset growth rate of more than 20 percent was significantly slower than the 2008, In-Stat still expects that 2010 will see resumed strength with units exceeding 180 million.

While the majority of current Wi-Fi enabled handsets are smartphones, feature phone manufacturers are also beginning to incorporate this feature -- providing a double stimulus for Wi-Fi handset growth.

"There are three primary zones of Wi-Fi handset usage," says Frank Dickson, In-Stat analyst. "At home, at the office and on the go. In the home, while broadband penetration has increased significantly over the past several years, so too has Wi-Fi home network penetration."

Enterprise smartphones will continue evolving to leverage VoIP's potential. On the go, consumers are increasingly leveraging Wi-Fi enabled handsets. Mainstream VoIP Apps, such as Skpe mobile, are now being accepted by mobile service providers -- as they overcome their revenue cannibalization fears.

I believe that when Google re-introduces the free Gizmo5 software-phone application, or another VoIP App for Android mobiles, we should see additional mainstream market uptake.

In-Stat's market study found the following:

- While the majority of respondents still access hotspots with a notebook PC, more than a quarter of the responses indicated accessing a public network with Wi-Fi enabled handsets.

- The potential for voice over Wi-Fi is gaining popularity, as cellular/Wi-Fi phones become more pervasive and consumer familiarity with VoIP increases.

- The Wi-Fi attach rate (percent of handsets with embedded Wi-Fi) will nearly triple from 2009's rate by 2013.

- While the enterprise was the original smartphone/Wi-Fi handset market, consumer adoption has also experienced strong growth, largely due to the success of Apple's iPhone.

IPTV Adoption Increasing at Very Slow Pace

According to the latest market study by Informa Telecoms & Media, the IPTV market continues to expand with global IPTV subscriptions reaching 29.7 million at the end of 2009, up from 19.4 million a year earlier.

In particular, IPTV has started to win significant share in several emerging markets and has made inroads into some developed mid-sized ones -- albeit at a very slow pace.

The number of quarterly net new subscriptions, or net additions, for broadband-based TV services from telecoms operators and ISPs reached a record high of 3.2 million in the last three months of last year. But just four countries accounted for nearly two-thirds of all IPTV subscriptions -- France, the U.S., China and South Korea.

"IPTV still has a long way to go. The technology had only 5 percent of the multichannel pay-TV market and less than 2 percent penetration of the world's households, despite services being available in over 50 countries. In many markets, services have simply struggled to make progress against cable, satellite and terrestrial TV competition," says Rob Gallagher, Principal Analyst at Informa.

But the potential for delivering broadband-based services to the TV should not be underestimated.

Despite the low number of success stories for conventional IPTV, the underlying technology is increasingly being embraced by cable, satellite and terrestrial TV providers as well as Internet firms, media groups and consumer electronics manufacturers.

IPTV has gained significant share in markets where one or more competing forms of multichannel TV are absent or weak, such as Iceland (81.0%), Qatar (80.0%), Cyprus (67.0%), Slovenia (35.0%), Croatia (25.0%), Estonia (25.0%), Montenegro (23.5%) and Greece (23.5%).

Services also began to take the majority of net additions in some more competitive mid-sized markets in 2009, including Switzerland, Belgium, Singapore and Portugal.

Connected TVs Advancing OTT Video Use

A recent market study by Knowledge Networks (KN) provides evidence that television and the Internet are becoming increasingly interchangeable -- when it comes to viewing network TV programs.

Among U.S. Internet users in the 13-to-54 and 18-to-34 age groups, viewing of complete TV show episodes via streaming or downloaded video has essentially tripled in the past three years -- growing from 8 to 22 percent of those ages 13 to 54 with Internet access, and from 12 to 30 percent of 18-to-34 online users.

Knowledge Networks' market study findings include:

- 7 percent in the 13-to-54 age group, and 11 percent of those 18 to 34, have used a TV set to watch streamed or downloaded online over-the-top video.

- 6 percent of those 13 to 54, and 9 percent of 18-to-34 consumers, told KN they have reduced or canceled their pay-TV service in the past year due to their online viewing of network TV programming, or expect to do so in the next year.

"The small but notable level of people watching TV programs via the Internet on regular TV sets suggests that the convergence of the two screens for mainstream audiences may finally be on the horizon," said David Tice, Vice President and Group Account Director at Knowledge Networks.

Growing numbers of connected TVs -- those that access the Internet directly -- are making this option increasingly user-friendly. The fact that over one-third of TV homes now have a bundled TV/Internet service package is no doubt accelerating this blurring of boundaries.

VoIP is a Critical App in Education Segment

New research from In-Stat reveals that the government vertical is among the strongest industry sectors for voice-over-IP (VoIP) service adoption. This makes sense, since government and education were the primary groups of legacy analog managed Centrex services.

Based on the In-Stat market study, 48 percent of respondents in government institutions report that VoIP is deployed in at least one location. The research reveals interesting distinctions among key vertical segments.

"Overall, integration is more critical than cost savings," says Norm Bogen, In-Stat research vice president. "However, cost is most critical in the education segment, while scalable features and capabilities are most important in the government segment."

In-Stat's market study also found the following:

- Verizon is the most cited Current Broadband IP Telephony Provider among government institutions, with a commanding lead over other providers.

- AT&T has the leading position as a provider of IP Centrex solutions across size of business and vertical markets.

- Cisco is the IP PBX market leader in all segments, but particularly in education.

- The Healthcare vertical is the strongest adopter of IP handsets.

- Hosted IP Centrex has appeal with government and healthcare segments, cited significantly more in these segments compared to the professional services or educational segments.

Why U.S. Publishers Seek e-Book Salvation

The Amazon Kindle e-reader and online e-bookstore has spawned a paid e-publishing content marketplace that has grown in the past two years. But, is this truly the profitability salvation that print publishers had hoped for?

Competition from other device makers -- such as Apple -- promises to further stimulate what is already one of the most dynamic areas of the digital content ecosystem.

Sales of e-books have grown steadily since the format first appeared in the early 2000 time frame. The Association of American Publishers (AAP) estimated that U.S. net sales to its 85 member publishers totaled $169.5 million in 2009 -- up 176.5 percent from the 2008 figure of $61.3 million.

In fact, revenue for 2009 was the highest ever, and the percentage gain was the greatest since e-books started producing a profit.

"Currently, most e-book volume comes from Amazon.com's Kindle Wireless Reading Device sales," said Paul Verna, eMarketer senior analyst. "But it is unlikely that Amazon.com will be able to hold on to such a dominant market as e-book pricing becomes more competitive and more complicated."

In newspaper and magazine publishing, opportunities are less tangible than for books, and monetization models are in flux.

Several publishers are looking to experiment with paid models after ad-supported efforts have fallen short. Existing paid plans included metered access, freemiums, 100 percent subscription sites and even donations in one case.

But many studies already demonstrated that consumers are very reluctant to pay up for news content -- unless it's truly of exceptional quality.

"Consumers will resist paying for content," Mr. Verna said, "especially in cases where they feel they can find the same quality information elsewhere online for free."

SXSWi 2010: Noteworthy Exhibitor Profiles

The following is a short list of exhibiting vendors, service providers and others that captured my attention at the SXSW Interactive event earlier this week in Austin, Texas.

I encourage you to check out their Web sites to learn more. The two basic themes I noticed were new tools that aggregate your online presence on various social media sites -- most are attempts at creating a dashboard-like solution.

The other noteworthy theme was a variety of easy to use do-it-yourself content management and microsite publishing tools, with a resurgence of basic HTML page designs (SEO-friendly CSS rather than Adobe Flash).

Awareness has created what they call "social marketing software" -- it's an integrated good-enough solution to building online communities for those who prefer not to apply the free best-of-breed tools that essentially do the same thing.

Sobees created what they call "my social client" -- the latest release adds Digg to the list of supported services which already includes Twitter, Facebook, YouTube, and Flickr, as well as RSS feeds.

Flavors.me says their service allows anyone to create an elegant website using personal content from around the internet -- the basic version is a simple landing page that combines all your profiles together in one place.

SnapPages describes itself as "website creation for the rest of us" -- they enable anyone to quickly build a public online presence of a couple Web pages.

Lifeyo is a new, Southern California-based start-up that is on a mission to make polished, professional websites accessible to anyone.

concrete5 makes running a website easy. Go to any page in your site, and an editing toolbar gives you all the controls you need to update your website. No intimidating manuals, no complicated administration interfaces -- just point and click.

Dotspots is a service that enables anyone to update the news in real-time with dots, or distributed objects of thought: mini-blog posts containing text, videos, images, documents, perspectives from the blogosphere, or eye-witness accounts from the scene.

Other interesting offerings include Phonebooth and Sliderocket. The Digital Mission from the UK included lots of interesting companies.

Update: One notable hardware vendor exhibitor was LaCie -- they featured several innovative tiny mobile hard drives that would be very suitable for on-the-go video editing and storage applications.

Smartphone Shipments are Growing Globally

Fourth quarter mobile phone sales typically outpace the rest of the year. However, according to the latest market study by ABI Research, the final quarter of 2009 was remarkable for the strength of smartphone shipment growth.

"4Q 2009 saw 25 percent more smartphones shipped than 3Q 2009," says analyst Michael Morgan. "Granted, the fourth quarter is usually better than the third, but 3Q saw only a 3.6 percent growth over the second quarter."

Individual handset vendors had plenty to be pleased about. Apple had its best smartphone quarter on record. Nokia did extremely well, shipping 21 million smartphones compared to its usual 15-16 million. RIM's BlackBerry had a strong showing as well.

The good performance was driven in part by falling smartphone prices and the introduction of entry-level smartphones generating greater appeal for new buyers.

Nokia effectively used its best weapon, economies of scale. The Apple iPhone maintained its cool factor. There were also some over-achievers -- such as the BlackBerry Curve -- which has actually out-sold the iPhone in some markets.

Apple benefited from expansion beyond their traditional North American market, increasingly gaining traction in Western Europe and East Asia -- Asia-Pacific iPhone sales increased about 500 percent year-over-year in 2009.

While all regions performed well, North America -- helped by mobile operator subsidies -- led global smartphone market growth at 30 percent, with Western Europe and APAC following considerably behind. Africa, the Middle East and Latin America all showed growth in the mid-high 20 percent range.

SXSW 2010: Free-Market for Earned Media

My big take-away from the South-by-Southwest (SXSW) Interactive festival this year was a further validation that big media companies -- traditional publishers of print content in particular -- are still searching for a way to halt their collective slide into eventual insolvency.

Surely, given their vast resources, the very best big publishers are capable of evolving their business model. At least, that's their hope for the future. But, how does an innovation-challenged organization avoid extinction when unrelenting disruption of the prior status-quo continues to erode their once dominant market position?

As I attended the various panels related to this topic, I was reminded of the book "Inside Project Red Stripe" by Andrew Carey -- the story of how six of The Economist's cleverest people tried to create the "next big thing" online and essentially failed, after investing six months in idea exploration.

Hope in the Trust Economy
Big media companies seem to now be clinging to the belief that their fate is somewhat contingent upon the perceived value of an established reputation -- as an example; they're a trusted-source of quality content that you won't find anywhere else.

The rationale goes something like this -- as long as they can perpetuate the facade of their unique trustworthiness, then they still have a fighting chance of competitive survival in the 21st Century.

That said, when looking for a viable solution to their numerous problems, self reflection on past strategic blunders doesn't appear to be under serious consideration. A case in point: the industry insiders still maintain (in denial) that their worsening situation is the fault of others, not theirs.

Craigslist is to blame for the loss of classified advertising revenue. Google is to blame for aggregating newspaper content, grouping it with non-traditional publishers and thereby confusing readers. Bloggers are to blame for producing good-enough quality content, combined with low-price advertising rates. The list of excuses goes on and on.

Competing with Amateurs isn't Easy
In the panel entitled "Media Armageddon: What Happens when The New York Times Dies?" we heard a New York Times employee lament how "professional" reporters are totally frustrated at being scooped by more agile bloggers who tend to publish the story long before the journalist is ready. Others on the panel made consoling comments about the unfair advantages of amateurs.

Ironically, the New York Times has had to deal with several setbacks that eroded trust in the organization's editorial staff -- one of the most recent being accusations of plagiarizing content.

In the panel entitled "Crowd Control: Changing the Face of Media, or Hype" an employee at CNN insisted that investigative reporting was alive and well at big media companies, even after the perpetual newsroom staff cuts. Others on the panel shared their thoughts about how complete and accurate new event coverage typically came only from the established news networks.

Yet, CNN was happy to report (after fact-checking?) on the existence of weapons of mass destruction, when there weren't any found in Iraq. Meanwhile, they neglected to report on Iraqi civilian casualties as a result of the many U.S. air raids during the initial invasion and occupation of Iraq.

Is that why some people say they now watch The Daily Show with Jon Stewart on Comedy Central for the most unfiltered news from around the world? Has news parody become the only remaining path to truth-in-reporting on network TV?

Earned Media in the Free Market
My favorite commentary at SXSW was the notion that perhaps the average American consumer is too stupid to know what quality research and news reporting looks like -- therefore, more people now read independent blogs.

Yes, that's right, it's the customer's fault -- they are to blame as well.

In reality, there's a growing free-market for trust in 2010 and there's also enough thinking people in America to sustain this market transition for a very long time -- if that's what it takes.

Thoughtful trust must be earned -- it's no longer implied by a mere legacy brand. You can't easily regain misplaced trust, it's worthless when you try to buy it, it's pointless to try and fake it. Those who truly are worthy of people's trust will have to compete with a multitude of others who have already proven to be equally or more deserving.

This, I believe, is a sign of much needed progress.

Update: most brands are inherently overvalued by their creators, when moving into a market adjacency scenario. Here's a case in point. Western Union thought they would be a major player in the e-mail services market, based on their legacy brand -- as a trusted provider of telex and cablegrams. However, they failed to fully understand the new medium, and they eventually shuttered their email business after a few years of deep financial loses.

Mobile Phone Subscriber Key Trends in U.S.

comScore reported key subscriber trends in the U.S. mobile phone market between October 2009 and January 2010. They also ranked the leading mobile OEMs and smartphone OS platforms during the same period.

The latest market study found Motorola to be the top handset manufacturer overall with 22.9 percent market share, while RIM led among smartphone platforms with 43.0 percent market share.

In the 3 month average ending in January, 234 million Americans were mobile subscribers ages 13 and older. Moreover, 42.7 million people in the U.S. owned smartphones in an average month during the November to January period -- up 18 percent from the August through October period.

RIM was the leading mobile smartphone platform in the U.S. with 43.0 percent share of U.S. smartphone subscribers -- rising 1.7 percentage points versus three months earlier. Apple ranked second with 25.1 percent share (up 0.3 percentage points), followed by Microsoft at 15.7 percent, Google at 7.1 percent (up 4.3 percentage points), and Palm at 5.7 percent.

Google's Android platform continues to see rapid gains in market share.

In an average month during the November through January 2010 time period, 63.5 percent of U.S. mobile subscribers used text messaging on their mobile device -- up 1.5 percentage points versus three months prior.

Web browsers were used by 28.6 percent of U.S. mobile subscribers (up 1.8 percentage points), while subscribers who played games made up 21.7 percent (up 0.4 percentage points).

Access of social networking sites or blogs experienced strong gains in the past three months, growing 3.3 percentage points to 17.1 percent of mobile phone service subscribers.

Internet Tablet Computer Market Opportunity

Tablet computers are the next significant device trend or simply another fad, depending on your point of view. The iPad promises to energize the emerging tablet PC segment and the opportunities extend well beyond just Apple.

According to the latest market study by In-Stat, the potential unit Total Available Market (TAM) for tablets could be as high as 50 million in 2014, but the success is highly dependent upon two key success factors.

The first requirement is to follow other successful devices in the market by offering a complete solution that includes the device, the wireless service, and the content.

In-Stat believes that the most recent successes in the mobile market highlighting the value of a complete solution is the Amazon Kindle Wireless Reading Device. The iPhone comes close, but still requires a separate mobile service provider contract.

The second requirement is to find the right combination of new technology, content, applications and services that provide a unique usage experience, then combine it with the appropriate business model.

Finding the right business model for monetizing the combination of device, connectivity and content has become a critical element in successfully launching new platforms.

In-Stat's market study found the following:

- Positioned between smartphones and PCs, tablets are attracting the interest of consumer electronics (CE) and computing OEMs.

- Thus far, only Apple and ICD have indicated carrier strategies, and only Apple offers a solution that includes content and applications.

- None of the tablets announced thus far offer all the benefits of e-readers or computing platforms, but new technologies and applications could help create a unique value proposition.

- The potential semiconductor opportunity in Table PCs, assuming that device adoption grows beyond the early-adopter segment, is over $4.1 billion in 2014.

U.S. Smartphone and Mobile Internet Adoption

Baby boomers will eventually adopt smartphones and the Mobile Internet, and at the front-line of this movement are the younger boomers. But boomer mobile Internet adoption rates will be similar to their social media uptake -- that is, slower than the typical early-adopters.

According to the latest U.S. market assessment by eMarketer, boomers must see the benefits before they adopt smartphones and mobile Web applications (Apps).

Back in 1995, boomers were the pioneers of basic mobile phone usage, exceeding or equaling other age group's uptake of the devices, according to the Pew Research Center. Ownership rates have now grown to more than 85 percent among boomers, the majority using feature phones. But only 55 percent consider their mobile phone a necessity.

"Internet use will be the driving force behind boomers adoption of smartphones and the mobile Internet," said Lisa E. Phillips, eMarketer senior analyst. "They are avid Web users but no longer such early adopters."

Boomers made up 30.6 percent of all mobile phone users in August 2009, according to comScore's age breakout. However, they made up only 19.6 percent of all touch-screen users and 21.1 percent of smartphone users.

Younger boomers (ages 45 to 54) were more likely than older boomers to use touch-screens, smartphones and any mobile phone.

"Boomers are underrepresented among smartphone users but are becoming more interested in the devices," said Ms. Phillips. "Smartphones are now well established in the marketplace, which should help to convince the portions of the boomer cohort that are not early adopters."

The business applications of smartphones should appeal to the boomers who say they plan to continue working after retirement age. But, device and data service price is a factor for many.

Pay-TV and Over-the-Top Video can Coexist

Consumers want their Internet TV, and they want it now, according to the latest market study by In-Stat. Already, based on In-Stat's new multi-client research study, 26 percent of U.S. consumer respondents report viewing Internet TV more than once per week.

However, rather than a substitute for traditional pay-TV services, consumers want their Over-the-Top (OTT) Internet video to complement their traditional TV offerings.

At least, that's the trend at this moment in time -- meaning, it's likely subject to change over time, as people gradually choose to abandon the legacy linear TV experience.

"Consumers want the best of both worlds: Pay TV and Over-the-Top Video," says Keith Nissen, In-Stat analyst.

Nearly 40 percent of consumer broadband household respondents want a combination of linear TV and on-demand TV, and nearly three quarters want to acquire all their video content from their pay TV service provider.

In-Stat's market study also found the following:

- While PCs remain the primary devices used for viewing Internet TV, consumers are increasingly using multiple devices, including internet TVs, and mobile devices.

- Consumers use a variety of devices to get internet video to their TVs, including PC-based media adapters, dedicated media adapters, gaming consoles, Blu-ray players, and Internet-enabled TVs.

- As of Year End 2009, there are an estimated 24 million web-enabled devices in operation in the U.S. market. This is expected to grow to 102 million by 2013.

Corporate Blog Loyal Reader Myth Exposed

Compendium announced results from its Corporate Blogging and Social Media Trends Survey. They gathered data from 266 companies about blogging traffic, visitor trends, and their business related Twitter usage.

The results counter the commonly held belief that business blogs have a core group of loyal readers. The study found that almost two-thirds of respondents reported more than 80 percent of all blog traffic was "first-time" visitors.

"As more traffic is being driven to corporate blogs through organic searches and more first-time visitors are landing on blogs, companies need to develop blog and social media content that is appropriate for this audience in order to be effective," said Chris Baggott, CEO and co-founder of Compendium.

Therefore, a keyword-optimized blogging and social media content strategy geared towards first-time visitors is a valuable tool for marketers to increase conversions.

Of the B-to-B companies surveyed, 64 percent of respondents said that between 61 and 100 percent of visitors were first-timers. First time visitors come from two major sources -- referring sites and search engines.

For companies selling to consumers, first-time blog traffic and traffic through search engines made up an even higher percentage of blog traffic, with almost three-quarters of the respondents reporting that 81-100 percent of blog traffic came from first time visitors and more than half indicating that 41 percent or more of traffic came through searches.

In addition to examining business blog trends, the survey also researched respondent's use of Twitter. Overall, less than half -- approximately 43 percent -- of the companies surveyed had established a Twitter account.

Twitter usage was highest among B-to-B companies with 87 percent maintaining an account.

To explore the topic of blogging and social media for the enterprise, Compendium has apparently created an Advisory Board of both social media and blogging expert practitioners.

Mobile Devices Drive Wi-Fi Hotspot Usage

While it's expected that enterprise users might express concern over the security of Wi-Fi hotspots, it is actually the individual consumer user that is driving these concerns, according to the latest market study by In-Stat.

Regardless, that concern isn't significantly holding back hotspot usage growth.

According to In-Stat's Wi-Fi hotspot market research, over three-quarters of survey respondents are personally aware of and proactive regarding security concerns.

The number of respondents indicating that their companies restrict Wi-Fi usage has dropped below 15 percent of the total respondents -- a significant shift from 2008 when nearly the figure was 31 percent of respondents.

"While consumers and businesses are cautious about hotspot security, this hasn't stopped them from using hotspots in dramatically increased numbers," says Frank Dickson, In-Stat analyst. "In-Stat estimates that hotspot usage will increase in 2009 by 47 percent, bringing total worldwide connects to 1.2 billion."

It's relatively easy to set-up a virtual private network (VPN), and most small and medium sized businesses now apply this form of secure connectivity on all their company's portable PCs.

In-Stat's market study found the following:

- Lack of availability was the second most cited barrier behind security to hotspot usage, followed by cost.

- Wi-Fi-enabled entertainment devices, such as cameras, gaming devices, and personal media players (PMPs) shipments will increase from 109 million in 2009 to 177 million in 2013.

- Asia Pacific will experience the greatest growth in Wi-Fi venue deployments over the next few years, largely driven by large-scale deployments in China.

Smartphone Users Access Social Networks

The latest comScore market study found that 30.8 percent of smartphone users accessed social networking sites via their mobile browser in January 2010 -- up 8.3 points from 22.5 percent one year ago.

Access to Facebook via mobile browser grew 112 percent in the past year, while Twitter experienced a 347 percent jump.

"Social networking remains one of the most popular and fastest-growing behaviors on both the PC-based Internet and the mobile Web," said Mark Donovan, comScore senior vice president of mobile.

"Social media is a natural sweet spot for mobile since mobile devices are at the center of how people communicate with their circle of friends, whether by phone, text, email, or, increasingly, accessing social networking sites via a mobile browser."

In January 2010, 11.1 percent of all mobile phone users accessed a social networking site via mobile browser, an increase of 4.6 percentage points from the previous year. Much of this growth has been driven by smartphone owners, 30.8 percent of whom accessed social networking sites on their mobile browsers -- up more than 8 percentage points on the year.

By comparison, just 6.8 percent of feature phone users accessed social networking sites on their mobile phones.

Access of leading social networking sites via mobile browser continues to see significant growth. In January 2010, 25.1 million mobile users accessed Facebook via their mobile browser, up 112 percent from the previous year. MySpace attracted 11.4 million users, approximately half that of Facebook, in January.

Interestingly, Facebook's mobile browser audience surpassed MySpace in February 2009, three months earlier than the Facebook audience exceeded that of MySpace on the PC-based Internet in May 2009.

Twitter, which has experienced tremendous growth in both mobile and PC-based visitation, attracted 4.7 million mobile users in January -- up 347 percent versus year ago.

These market study results don't include access of the social networking services by the nearly 6 million mobile phone owners who do so exclusively through mobile applications (Apps).

Upside for Consumer Network Storage

With home broadband networking adoption passing 50 percent of households in North America and 13 percent worldwide, the consumer network storage (CNS) market is seeing continued growth.

Web-enabled consumer devices, such as TVs and Blu-ray players, are further diversifying the demand and applications for consumer network storage devices, according to the latest market study by In-Stat.


"Consumer network storage devices increase the content that can be stored and distributed via the home network," says Norm Bogen, In-Stat analyst. "This increases the value of the entire home network to its users, as well as enabling new applications and capabilities."

I've been working on enhancing my own content storage capabilities, and will post a review of a high-capacity USB flash drive shortly. And, I'm in the process of selecting an external mobile hard-drive storage device -- in both use cases, for my video content transport applications.

In-Stat's market study found the following:

- The consumer network storage market will grow at a compound annual growth rate of nearly 40 percent between 2009 and 2014.

- 27 percent of North American consumers that own a network-capable video game console use the devices to watch video that is stored elsewhere on the home network.

- North America was the largest CNS market in 2009. Starting in 2011, Europe will become the leading CNS market.

- Consumer network storage capacities up to 1.5 terabytes will peak in 2011, giving way to even higher capacities.

Growing SMB Social Media Marketing Usage

eMarketer reports that U.S. small and medium businesses (SMBs) are adopting social media marketing in greater numbers, according to a market study by Network Solutions and the Center for Excellence in Service at the University of Maryland.

Social media usage increased to 24 percent, from 12 percent the year before.

It's interesting to note that the most common usage of social media among small business was a company page on a social networking site, followed by posting status updates.

SMB expectations of social media are in line with their experiences, although they are not quite as successful as they had hoped.

Survey respondent's top accomplishments were customer acquisition and placing their own businesses within the market, but did not meet expectations fully.

Social media's capabilities for staying engaged with consumers and collaborating with other businesses, however, were more in line with user expectations.

Most SMBs say they are breaking even with their current usage of social media, but one-fifth find it profitable already. Nearly one-half believe it will make them money in the next 12 months, and another 39 percent think they will break even. Just 9 percent think social marketing will result in a loss.

Overall, 58 percent of respondents believe that social media lived up to their expectations. One-half felt it took up more time than they realized, but only 6 percent claimed negative comments on social media had hurt their business.

OTT Long-Term Disruptive Effects on Pay-TV

According to the latest market study by Leichtman Research Group (LRG), 24 percent of U.S. households have a TV connected to the Internet. These connections vary from access via a video game system, a Blu-Ray disc player, an IP video set-top box or the TV set directly.

Internet connectivity is becoming a common built-in feature in consumer electronics devices, but consumers are just beginning to use this capability to watch IP video online. The upside growth opportunity is therefore huge.

Overall, just 1 percent of all adults currently watch video from the Internet via one of these devices daily, and 5 percent weekly. Usage is skewed to young men -- with 16 percent of men ages 18-34 watching video on a TV weekly, compared to 3 percent weekly use among all others.

Other findings from the market study include:

- 20 percent of households have a video game system connected to the Internet, 8 percent have an Internet-connected TV set, and 6 percent have a Blu-Ray player with an Internet connection.

- 55 percent of Netflix subscribers report that they used the "Watch Instantly" feature in the past month -- overall, 1 percent of all adults use Netflix's "Watch Instantly" daily, and 4 percent weekly.

- Overall, 3 percent of adults watch a full length TV show online daily, and 11 percent weekly.

- 5 percent of those online at home strongly agree that they would be willing to pay $9.95 per month to watch TV shows online from a service like Hulu, while 81 percent strongly disagree.

- Among all individuals online at home, 4 percent strongly agree that they would consider disconnecting their TV service to just watch video online -- compared to 3 percent last year, and 4 percent two years ago.

- In total, 0.3 percent of the overall sample are current non-subscribers to a multi-channel video service who disconnected their service in the past year and agree that they don't need to subscribe because most of what they want is available online.

"Despite speculation that consumers are 'cutting the cord' to pay-TV services and choosing to watch video exclusively online or through other alternatives, there remains little evidence of this being a trend," said Bruce Leichtman, president and principal analyst.

"Emerging video services do not necessarily create either/or scenarios in decisions to subscribe to a video service or not. Rather, they create opportunities and trade-offs in how, when, what, and where to consume the increasing video entertainment options."

I previously described a situation analysis, about the need for better market segmentation research. Once people adopt an over-the-top (OTT) service like Netflix IP video their use of traditional linear broadcast and pay-TV declines over time. The long-term trend is clear, however, flat-fee VoD subscription services -- such as Netflix -- are disruptive to the legacy TV business models (both Ad-supported and pay-TV).

Note, the Leichtman survey sample included 1,250 households throughout the United States.

Mobile VoIP Plans its Escape from Captivity

Innovation isn't a typical event at mobile phone service providers. If the Apple iPhone hadn't introduced the concept of "visual" voice mail, then it's unlikely that this capability would ever have been introduced by any SP.

Likewise, the benefits gained from Skype and Google Voice will drive Voice over IP (VoIP) service evolution.

In-Stat estimates the total number of mobile VoIP users will reach 288 million by the end of 2013. Of these, well over half will be associated with online mobile VoIP providers, under one-third will utilize mobile VoIP with traditional 3G MVNOs or mobile operators, and 11 percent with WiMAX/LTE operators.

On a geographic basis, mobile VoIP will be heavily biased towards the more progressive Asia-Pacific region, particularly among the online mobile VoIP services.

"The near-term opportunity for mobile VoIP is closely linked with the growing success of dual-mode phones and other Wi-Fi connected devices," says Frank Dickson, In-Stat analyst. "However, mobile VoIP still poses a direct threat to operator voice revenue and operators are navigating how to balance new opportunity with the threat."

What do subscribers want from a mobile VoIP service? Are those needs even a design criteria for mobile phone operators that are typically more concerned with their own vested interests? Which mobile provider is the leader in applying user needs market research for service development? We don't know the answer -- it's an unsolved mystery.

In-Stat's market study found the following:

- In-Stat projects that by 2013 mobile VoIP applications will generate annual revenues of $35.2 billion.

- While the EMEA region has more mobile VoIP related revenue currently, Asia-Pacific will be the largest regional market in revenue terms by 2013.

- Dual-mode handsets (Wi-Fi + Cellular) will be well over 400 million units shipped in 2013.

Cable MSOs Investing in New Infrastructure

Demand for broadband access to the Internet and digital video pay-TV services continues to drive new infrastructure investment. Infonetics Research released the fourth quarter (4Q09) edition of its cable modem termination system (CMTS) and Edge quadrature amplitude modulation (QAM) hardware and subscribers report.

"True to form, operators in North America, particularly in the U.S., spent what was left of their equipment budgets in the fourth quarter of 2009, giving a year-end boost to CMTS and edge QAM vendors," said Jeff Heynen, directing analyst for broadband and video at Infonetics Research.

Comcast, Time Warner, Cox, and Charter all acquired more downstream capacity by adding more CMTS ports, and Time Warner Cable continued its major upgrade to switched digital video, which helped bolster edge QAM revenue.

"Over the last 5 years, ARRIS grew its share of the worldwide CMTS market from 18.6 percent in 2005 to 42.9 percent in 2009, while Cisco's share declined from 54.4 percent to 38.4 percent, with ARRIS taking the lead from Cisco for the first time in 2009. Meanwhile, Motorola maintained a relatively even keel over the same period, increasing its CMTS revenue but losing a few points of share to ARRIS as well," adds Heynen.

Highlights of the Infonetics market study include:

- Worldwide CMTS and edge QAM vendor revenue increased 22 percent to $363 million in 4Q09 from 3Q09, led by sequential gains by the three major players in the market, ARRIS, Cisco, and Motorola.

- Cisco posted the strongest gains in North American CMTS revenue for the last 2 quarters.

- Worldwide CMTS revenue was down 10.7 percent in 2009 (2008 was a record year for CMTS deployments), while edge QAMs ticked up 6.4 percent for the year.

- Together, CMTS and edge QAM sales totaled $1.24 billion in 2009.

- BigBand had a big quarter in edge QAM shipments, and had passed a total of 33 million homes with its switched digital video solution by the end of the fourth quarter, an increase of 5 million homes from 3Q09.

Adoption of 3D-capable Consumer Electronics

Within four years, 50 percent of U.S. homes will own a 3D-Ready TV, and the adoption of 3D–Ready Blu-ray players won't be far behind -- with one out of every three U.S. homes owning one, according to the latest market study by Futuresource Consulting.

"Our research shows an imminent upsurge in the adoption of 3D-capable High Definition (HD) and Blu-ray hardware, now strengthened by a clearly defined 3D roadmap," says Jim Bottoms, Director at Futuresource.

Futuresource expects that a high percentage of Blu-ray players will ship with 3D capability next year, and within a few years it will probably be difficult to buy an HD video disc player without 3D.

Hunger for 3D content will also be driven by owners of PS3 consoles who will be able to play 3D Blu-ray content via a firmware upgrade. For those consumers not yet convinced by the HD experience, 3D will be a highly persuasive reason to upgrade.

Combine this with other premium features -- such as connected TV and Entertainment Database Browsing -- which allows users to browse actor and production information, and consumers in the early-adopter and early majority segments will begin to upgrade fairly quickly.

"With a number of leading hardware brands all vying to carve out an early position in the 3D TV and BD market, 3D Ready TVs and players will seed the 3D market in much the same way as the HD market was primed five years ago, says John Bird, a leading strategy analyst at Futuresource.

By 2015 they expect the majority of TVs available will be 3D-Ready and the normal replacement cycle will result in a good proportion of households in the U.S., Japan and Europe having a 3D-capable display.

Bird says that there's a feeling of excitement surrounding 3D at Futuresource, and they believe the new unified approach will translate into commercial success within the course of the next few years.

Why Traditional EPGs are Doomed to Failure

Thousands of TV programs currently compete for "passive consumer" audiences. With such a huge range of traditional linear TV content, the electronic program guide (EPG) is being promoted as a viable solution -- according to the latest market study by Screen Digest and consulting firm Goldmedia.

It's estimated that 59 million households in Western Europe were equipped with EPGs at the end of 2008 -- a penetration of 36 percent of all TV households. This number will grow 19 percent yearly between 2008 and 2014 so that nearly three quarters of all TV households will have access to EPGs in 2014.

The analysts report has identified about 300 EPGs on the different platforms in Western Europe. These include EPGs in set-top boxes from pay-TV and infrastructure providers, online EPGs from TV guide magazines, TV platform providers, online providers and mobile EPGs.

The research results indicate that market volumes from direct revenues in Western Europe will triple by 2014. Direct EPG revenues primarily come from B2B transactions -- from technical development, implementation of EPGs in end devices, licenses, software and program updates.

The progress of development differs by country and corresponds closely to the digitization process of the TV infrastructure. According to the analysts, the spread of pay-TV and IPTV, the degree of innovation among cable network operators and the proliferation of end devices with specific EPGs are essential factors in development.

The UK has been the most developed EPG market in Western Europe to date -- 70 percent of UK TV households already have EPGs. The Sky Guide from BSkyB is the most widespread EPG in Western Europe, with over nine million users. Cable network operator Virgin Media also offers customers access to the BBC iPlayer via its EPG in a hybrid set-top box.

EPG penetration in Italy is relatively high at 38 percent where the market benefits primarily from government subsidies for DTT boxes and the promotion of the interactive standard MHP. Germany lags behind many other countries in Europe, primarily because of the relatively low penetration of digital and pay-TV.

"The traditional market for EPGs is in broadcast TV and it is likely to remain that way, but we are finding increased interest from non-traditional vendors including some of the largest consumer electronics and media companies," said Tom Morrod, Senior Analyst, Screen Digest.

In contrast, I believe that the traditional EPG is doomed to failure -- because they're developed with a content producer and/or pay-TV distributor perspective. Meaning, the subscriber needs -- finding content that fits their personal interests -- are considered an insignificant afterthought.

That has created the huge window of opportunity for Personalized Entertainment Guides (PEG) -- made possible by intelligent recommendation engines, and supplemented by friends and family content suggestions via social media. Once people discover the alternative to EPGs, there's no going back.