Mobile about to hit the wall
Frost & Sullivan industry manager ICT research, Marc Einstein, has predicted that the mobile telephone sector will need to buckle in for a tough time, because saturation is going to throttle back mobile revenue growth rates.
As Australia approaches 100 per cent 3G mobile penetration and sits at 50 per cent smartphone penetration, the growth experienced in previous years will plateau, he said. Australian telcos would be facing 0.86 per cent compound annual growth rates in mobile revenues over the years from 2011 to 2016, according to Frost & Sullivan predictions. In 2011, the growth rate sat at 7 per cent. It was going to happen across Asia, he said, with only a few markets, such as India, managing to keep their growth at double-digit levels.
"The good old days of double-digit growth is over," he said.
Mobile users were not going to want to pay more for services unless telcos could come out with something new from under their belt, he said. Telcos need to innovate if they want to continue growth.
Japan had already been feeling the pain, he said, with mobile revenues for NTT DoCoMo contracting over the last few years because the mobile market had reached saturation. Einstein predicted that saturation would occur in Australia in five years.
Meanwhile, telco will be facing performance pressure because of spectrum shortages, Einstein said, which he predicted would lead to mobile telcos around the world switching off their 2G networks. The US has already been showing strain, he said.
Australia is currently in the process of renewing spectrum licences in the 800MHz and 2100MHz. This year will also see the auction of 700MHz and 2.5GHz spectrum as analog television is laid to rest. This is considered by the telco industry to be waterfront spectrum for telcos wanting to build 4G networks.
Einstein said the switching off of 2G networks would be a political issue, especially since some residents would be operating off those networks solely. When Telstra switched off its CDMA network in 2006, farmers were up in arms about the closure.
The National Broadband Network (NBN) would likely have a role to play in helping the mobile networks serve their customers, he said.
He noted that Vodafone Hutchison Australia was leading the way by being a mobile carrier jumping on board with fixed services, but said that he didn't think there were going to be lots of carriers offering services over the NBN, as he didn't think it would be sustainable.
Other companies that Frost & Sullivan predictions said were going to be facing difficult times were resellers, which would be derailed by the increasing penetration of easily accessible cloud services, as well as tier two unified communications vendors and banks.
Audrey William, research director for Frost & Sullivan's ICT practice, said that videoconferencing was experiencing "an explosion" at the enterprise level, predicting 19.1 per cent compound annual growth rate from 2010 to 2017.
However, while tier one vendors will laugh, she said that tier two and tier three would face threats to their business from the likes of Facebook and Google.
"Companies who have been playing in this space for years really need to innovate," she said.
It was a similar story with banks, according to Andrew Milroy, Frost & Sullivan vice president ICT research, which could face serious competition from Facebook, as it is also selling a significant amount of wealth management.
Indeed, Milroy is not the only one who has seen competition coming from this sector, with Choice recently wondering if Facebook would become Facebank.
William said that the banks needed to use cloud services to innovate so that they could provide products like the ones that their nimble competitors would offer.
Cloud had become mainstream in Australia, William said, saying that Frost & Sullivan expected a 37 per cent compound annual growth rate from 2010 to 2015 for public cloud services, bringing the spend from $399 million to $1.9 billion in the country.
Cloud also featured in Deloitte's 2012 predictions, which were released yesterday, although Deloitte said that it saw cloud becoming "hyper-hybrid", with companies making use of a mix of multiple cloud offerings, some of them on presence. This was only one of 10 technologies the analyst house outlined for 2012, the other nine are listed here:
Social business: enterprises who ignore social should beware, according to Deloitte, which says that business value is available
Enterprise mobility unleashed: organisations will make use of enterprise class applications, linked to back office systems and data
Gamification: 2012 is the year of the serious gaming simulation, with gaming becoming embedded in day-to-day business for applications such as skills-based learning
User empowerment: IT democratisation will continue, with employees sourcing products from cloud or app stores
Geospatial visualisation: combine data from mobile devices and other new sources to existing enterprise data and you have an explosion of geographical location-aware data
Digital identities: the protection of digital identities is becoming important. Digital identities should be unique, verifiable, able to be federated and non-repudiable, Deloitte says
Data goes to work: business is digging into its big data to gain insight, complementing but not replacing existing information management investments in data warehouses and business intelligence
Measured innovation: this is all about taking the mysterious element out of innovation by adopting a deliberate and disciplined approach to innovating and making sure its results are measurable and repeatable
Outside-in architecture: change is a constant factor, so flexibility in architectures and business models is important to enable rapid evolution.