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PREDICTIONS: Agere Systems 10 predictions about the Cell Phone Industry in 2007
Posted by Arne Hess - on Thursday, 23.11.06 - 11:24:11 CET under 01 - General News - Viewed 11737x
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As the year 2006 winds to a close, Roman Polz, Senior Manager of  Agere Systems' Mobility Division suspect a key question on all our minds: "What will happen in the wireless industry in 2007?"
Roman makes ten predictions and while I wouldn't agree to all of them, they are a great starting point for further discussions and thoughts how the mobile industry might goes on in 2007, what the customer expectations are (or not) and how we might start (or already continue) to use our mobile devices in 2007.

Prediction Number 1: CD-Quality Music Will Be The Killer Cell Phone Application
Within four years compact disk (CD)-quality music is going to be on more than half the entry-level cell phones used around the world. Music will be the killer application on cell phones measured by consumer use and revenue-generated by handset makers and wireless service providers.
For substantiation of this prediction consider the iPod's enormous success. People will pay for good-sounding music, including hundreds of their favorite songs, easily accessed by simply pressing a button. And these music cell phones will store hundreds and later thousands of songs, which is plenty for the average music fan.

Prediction Number 2: Mobile TV Use on Cell Phones Will Grow, but Not as Fast as CD-Quality Music
Mobile TV will continue to be developed in the next few years, but will be challenged to win market acceptance because of the small size of cell phone screens. These diminutive screens make long-term, non-stop viewing unappealing, not a wonderful user experience.
Conversely, music will be a non-stop, slam dunk appealing feature of a cell phone that won't require staring into a small screen. It will only require the cell phone user to listen and relax.
The most likely mobile TV applications will be people checking sports scores and updates; cartoons, videos, standup comedy and general news. All these will need to fit in about a 3-to-20-minute time frame, according to industry experts. Most people won't watch TV on a cell phone for much longer than that, except for some special, out-of-the-mainstream reasons.

Prediction Number 3: The Earliest and Most Frequent Users of Mobile TV Will be People Riding Trains To and From Work
Mobile TV's early adopters are expected to be mass transit commuters, primarily Asian and European adults wanting to get the early morning news or sports highlights for 10-to-15 minutes from TV stations. This already has started in Asia and will take off in Europe in particular because a much higher percentage of them take trains to and from work each day than Americans.
Put another way, in America, every cowboy has his own horse, meaning his own car. This is not literally true but the concept is accurate. Because such a large percentage of them drive to and from work, they won't be able to watch TV as much as people riding trains.
This kind of mobile TV viewing will replace to a substantial extent the time such commuters historically have spent reading newspapers.
One problem that will continue to vex mobile TV, however, is that it can swallow the bandwidth available in the network, which is why only a few wireless service providers plan to provide mobile TV as an individual data stream. Instead, they are working on collaborations with companies that have broadcast TV networks, but these relationships are in their early stages of business development.
Wireless service providers want to increase the average revenue they can generate per subscriber. Just giving a subscriber that has mobile TV capability does not immediately and easily translate to boosting those revenues per user. So why should they promote mobile TV if it won't help them generate more revenues? This is a key, largely unresolved question.

Prediction Number 4: Digital Cameras on Cell Phones Will Have Less Customer Adoption Compared with Music
A cell phone camera generally produces average-to-poor quality photos compared with stand-alone cameras, which is no wonder when looking at the price. Average cell phone cameras cost virtually nothing whereas stand-alone cameras have a price tag similar to a feature phone.
So who wants to use a bad camera to take relatively low-quality photos? It doesn't make much sense. If you are interested in taking good photos, you might as well pay for a good camera.
Furthermore, only a small percentage of cell phone users, similar to the overall population at large, are avid users of cameras. This percentage is much lower than the number of people who like to listen to music.
Still, to be clear, cameras will not disappear from cell phones, but usage of average cell phone cameras will be low compared to music players.

Prediction Number 5: The Entry-Level Cell Phone Market Will Be the Sweet Spot for CD-Quality Music Applications
There is a large market, called the entry-level cell phone market, just above the emerging markets ultra-low cost cell phone segment. Users that can't or don't want to spend money on feature-rich, high-end phones still have the desire for functionality that goes beyond just voice and short messaging service.
That's why the entry-level market, offering compact-disk quality music, will be the sweet spot of the market for the next several years. These entry-level phones will be higher-performing and more feature-rich than the ultra-low-cost segment, which are extremely basic phones. These entry-level cell phones will also be much more affordable than the “Swiss Army Knife” type of phones with lots of unused features.

Prediction Number 6: India Will be the Fastest Growing Cell Phone Market for the Next Several Years
India, which has emerged as a great new frontier for cell phone business, will in the near future focus heavily on the ultra-low-cost cell phone segment but soon develop a strong market for entry-level cell phones. A huge number of Indian citizens won't be able to afford the higher-end models priced in the US$ 200 - US$ 400 range.
But they can afford lower-cost ones. According to the Gartner Group, India's mobile penetration rate hovers at 7 percent now. It is projected to grow to 32 percent by 2010. According to Gartner Group, India is the world's fastest growing cell phone market at 31 percent annually.

Prediction Number 7: Simultaneous Cell Phone Applications Will Be Crucial
Think about this: You don't want to stop listening to music while you receive and answer a text message. You don't want the music player to stop playing while a call comes in; you prefer that it just pauses, waits in the background and is ready to continue playing after the call.
Or let's say you're speaking to someone on the cell phone about going to a movie together that night. You want to download a video clip to view it so you can decide with the person on the phone whether the one you have the video clip for is the one you want to see.
You don't want to have to turn off your cell phone-essentially ending the call-to see the video clip. You want to be talking to the person on the other end, then look at the phone's display screen so you can view the video clip. Then you can put the phone to your ear and talk about the video clip.
These are examples of simultaneous cell phone applications, which are growing in number, complexity, and benefits. Cell phones that can do the most simultaneous applications at the most affordable costs will win over consumers.

Prediction Number 8: More Feature-Rich Cell Phones Will Be Key in Enabling Wireless Service Providers to Boost Their Average Revenues Per User
Wireless service providers will continue to grapple with a problem that has been vexing them for years. The problem is that even though the growth rate for cell phone sales and cell phone subscribers continues to increase, the average revenue the service providers and handset manufacture gain from each subscriber continues to fall.
To increase that revenue, a growing number of service providers will continue to pitch and offer cell phones and subscribers on more feature-rich, revenue-generating services such as high quality audio streaming, download portals for music and video, and mobile TV.
The basis for people to have a good experience using these services is the performance of the network connection and the quality of the multimedia in the cell phone.

Prediction Number 9: 3G Cell Phones Will Not Be All About Merely Enabling the Connected Lifestyle, but Rather Perfecting the Connected Lifestyle
The cell phone will be central for perfecting the connected lifestyle. This means that in the future reliable, consistent, always-on connectivity will become essential anywhere, anytime.
It will become less acceptable during the next few years to just make a cell phone connection. The connection will need to be perfected, meaning not flawed and unreliable, but rather as good as it can be.
Lousy service, interrupted calls, the inability to connect and stay connected will become less tolerated than ever. An industry-changing mindset will take over, in which it won't be about being wirelessly connected. It will be about being wirelessly connected quickly, easily, inexpensively and reliability-in other words, perfectly.

Prediction Number 10: More Collaborations Will Be Necessary to Survive and Thrive in the Cell Phone Market
Wireless service providers are teaming with the holders of music and video rights to offer downloads, and they will be building relationships with broadcasters to deliver mobile TV without burdening the mobile network. On the handset side, a rapidly growing number of collaborations will be formed between hardware and software companies to build more complete, more reliable, and more feature-rich cell phone platforms.
Fewer companies will be able to do everything required to build a platform on their own. Cellular baseband experts, for example, will collaborate with providers of global positioning system solutions, for installation in these basebands, to provide value-added functionality. These collaborations will help accelerate time to market while minimizing research and development expenses.

So what do you think about these 10 predictions? Any additions or corrections?

Cheers ~ Arne

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Posted by Alfredo Padilla on 26.11.06 - 21:34:34

I must say I disagree strongly with his assertion about cameras in cell phones. The simple fact of the matter is that Nokia and Sony-Ericsson have already proved that putting a high quality camer into a cell phone not only can be done, but can be done at a price point that is very competative with a stand-alone camera. By the end of next year a phone like the nokia N73 will be priced as an entry level phone and its 3.2mp camera which provides great picture quality (impressing even my wife who is something of a camera snob) will definately give consumers an opportunity to forget about purchasing a stand-alone low end digital camera.

Posted by MauiDude on 30.11.06 - 10:53:55

Are these Agere guys stuck back in the 90's???? All that they predict is already happening!! OMG! read some tech news sometime guys!! Ever heard of the MP3??? I guessed not. Theres a little something called bitrate....

I sure hope people aren't betting on stocks listening to these guys?? Scary. As far as cameraphones go..just look as far as ASIA!!! I can't believe the unwired would even publish such an out of date view of the industry. Did you guys dig that up from like 5 years ago?? Come on now guys!

Posted by Operator Inside on 30.11.06 - 12:28:31

MauiDude, I think you didn't got the message. These 10 predictions are about the mobile industry and not predictions for the early adaptors like most of us readers here are.
There is no entry level music market today, not from the operator point of view but, the devices which are service capable are still relative expansive (for instance Nokia N91 & N93). Same for mobile TV.
Also we are not talking about mass market mobile TV yet (in the industry) but geeks (sorry Arne, I mean it with all respect) like Arne use it and talk about it but ask John Doe on the street about "place shifting" or "SlingBox" (not to mention DVB-H or T-DMB).

As somebody working for a mobile carrier, I can confirm that we expect the mass market level for some of the mentioned services in 2007 too. Others we see to become important even later but again, we are talking about mass market consumers where our revenue comes from, not from highly educated geeks and early adaptors. And no, even if most of our devices support MP3 today, it's not what we see as an integrated media service.

Posted by peter buchan on 02.12.06 - 20:10:29

hi guys,

Coincidentally i also found this Top 10 predictions article also appears here at FierceWireless -> … omment-103

So who is the article source? Agere or FierceWireless?

Posted by Arne Hess on 02.12.06 - 23:23:15

peter buchan wrote:

So who is the article source? Agere or FierceWireless?

It's Agere Systems. Click the "For more on the predictions - see the full write-up here" link at FierceWireless. It links to another site which published the same predictions by Agere Systems.

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