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Open Mobile

The growth era accelerates


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Open Mobile: The Growth era accelerates is the latest study in a series of ongoing mobile research from the Technology, Media and Telecommunications team in Deloitte Research and offers insight and guidance on maintaining competitiveness in the face of heightened market competition and technological disruption. At the core of the study is a survey on the impact open mobile will have over the three to five years’ timeframe. Issues covered include the transformation of the planning, preparation and overall strategy formulation process in mobile technology-oriented companies today. The survey checks the pulse of companies in the throes of transitioning from closed business models to a more open, collaborative approach to competing in the mobile 4G era.

Download the full Open Mobile report below as well as an overview of the report’s five key themes.

Hypercompetition

Rapidly evolving mobile Web technologies have introduced a period of hypercompetition in the mobile sector. New entrants wielding disruptive technologies are chipping away at incumbent advantages and profits. Traditional standards and established market “rules” remain volatile. Shifting technologies, policies and consumer demands are giving rise to a black-swan-like push toward a less restrictive, open era. Unrelenting waves of innovation are forcing mobile incumbents to embrace a newly democratized world and abandon bygone revenue streams.

Accelerating into the 4G era

Against this backdrop of heightened competition, the rollout of fourth generation (4G) LTE and WiMax wireless network technologies is gathering speed. The long-awaited network upgrade is expected to address voracious U.S. consumer demand for faster downloads and greater bandwidth, which should provide the backbone for enhanced mobile products and services. These new networks promise to introduce a new wave of mobile ubiquity and increased innovation across the mobile value chain and beyond. Although nationwide 4G coverage is still some ways off, the network-standards battle between WiMax and LTE is tilting in favor of LTE, which has a clear cost advantage over WiMax in part due to being backward compatible with GSM and HSPA technologies.

Analyst estimates suggest that LTE services will generate more than $11 billion in revenue in the United States by 2015 and that 303.1 million people around the world will subscribe to LTE by 2014.

Weeding out the walled garden

Deloitte’s 2012 Open Mobile survey reveals a rapidly evolving mobile power structure. Our survey offers fresh insight on the opportunities and challenges that lie ahead for the sector. According to 49 percent of our respondents, Web companies, rather than network carriers or handset makers will dominate mobile in five years. Moreover, 89 percent believe the role of carriers will be limited to delivering data access anywhere and anytime. Meanwhile, 87 percent believe that carriers must make the transition from the walled gardens of the past to new organizational models built around open development ecosystems to sustain competitiveness.

These data points highlight the profound challenges that hypercompetition will introduce for established wireless carriers. A large number of respondents — 49 percent — think that Web companies like Google and Apple will come to dominate the mobile sector in five years. In the same vein, 31 percent of respondents employed by network carriers think the proposed changes in open access regulations will accelerate the commoditization of carriers and 90 percent of the same group believe the traditional carrier “closed garden” business model is quickly becoming a strategic relic. Future growth in mobile now rests on the proliferation of open platforms across multiple facets of the value chain. In particular, the burgeoning mobile software applications market is considered critical to success.

The incumbent challenge

With the threat of diminishing returns from traditional network assets and basic connectivity rising, many network carriers worry that their industry dominance will ebb if they embrace the shift towards more open platform strategies. But to avoid the dreaded “dumb pipe” scenario, the challenge for incumbents will be to navigate toward future revenue streams. This will require a more collaborative mindset and new organizational capabilities.

This new report – the latest in a series of open mobile research offerings – is based on survey responses from 250 senior executives from network carriers, mobile device manufacturers, software application developers and infrastructure component manufacturers. Among the survey data, critical insights in the
study include:

  • The mobile power structure is rapidly changing: new entrants continue to rewrite the rules on competition.
  • Mobile services and the surging “apps economy” are poised to drive future revenue opportunities.
  • The healthcare sector may be the most promising new mobile growth channel.
  • The feeble economy isn’t compromising plans for the open mobile era.
  • Open source technology platforms continue to grow a powerful presence across wireless.
  • Mobile carriers can sustain competitive advantage with astute platform leadership and ecosystem strategies.
  • Collaboration, through shared knowledge and learning, will drive innovation in the 4G era.

Download the full Open Mobile report as well as an overview of the report’s five key themes.

About the Deloitte Research Open Mobile Series

Since 2009, the Technology, Media and Telecommunications team in Deloitte Research has explored the advent of the open mobile era and the subsequent shifting competitive landscape in the United States and global mobile markets. The team has produced a number of research reports and whitepapers on a wide range of strategic issues mobile technology companies face in this increasingly turbulent industry.

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