Monday, 8 January 2007

Predictions for 2007

So what better way to kick off the blog than with a set of predictions. It's at this point that someone usually mentions the quote from the former IBM chairman about there only being "a world market for maybe five computers." Oops. Looks like I've done that too.

No doubt some of these will also come back to haunt me. In no particular order...


  1. Vodafone to sell out of Verizon Wireless - they've disposed of a stack of minority interests (Belgium, Switzerland) and a majority (Sweden), so why hold on to 45% of Verizon Wireless. Sure it generates a lot of money, but the new strategy of getting into emerging markets won't come cheap. So if the price is right, I think Arun will sell. Next target: the rest of Vodacom plus MTN. They cover most of Africa and the only footprint overlap is South Africa.
  2. Hutchison Whampoa sells 3 - the X-Series announcement was effectively the last attempt to really kick-start 3 as a mobile media company. If it doesn't pay dividends in terms of market share gains, ARPU increase and crucially a reduction in subscriber acquisition costs, expect H3G to head for the door.
  3. SonyEricsson will have a good year - what a great range of devices!
  4. Flat-rate mobile internet becomes the norm - X-Series should shake things up a bit, following in the footsteps of web'n'walk. People want the internet on their mobile, not mobile internet. Any mobile operator that gives the people what they want will be on to a winner, even if it's only a £5/month winner.
  5. Mobile music still won't generate any revenue (except for ringtones) - if the entire digital music market in Europe in 2006 is only worth about €300m then just how big can the mobile music market be? About 10% of that I'd say. That's backed up by the limited numbers released by the operators: a few million sales here, a few million there. In revenue terms it's not huge (particularly because there are a lot a 3-for-2 and bundled deals for example). About 0.5% of the mobile entertainment market - that puts it in perspective eh?
  6. Everyone will plump for DVB-H - It's the only really viable choice. Anything else is a stop-gap, won't have any handsets or will arrive too late. Personally I think operators have overestimated how much people want to revert back to the days of linear programming when they're increasingly embracing interactivity and choice. YouTube on the mobile is what's really appealing, not re-runs of Lovejoy (although now I mention it, I always had a soft spot for the mulleted lothario). Shared DVB-H networks all round.
  7. Fixed mobile convergence won’t make the splash it’s expected to in the consumer market. FMC is a supply driven proposition. Users don’t care about the technology, no matter how clever it is. They want cheap (and that includes incoming calls, broadband fees and line rental), convenient (one number please!) and a good handset (nice phones though they may be, a range that consists only of the Nokia 6136, Samsung P200 and Motorola A910 is not good enough). With increasingly large bundles of voice minutes, mobile-only options can match FMC offers for consumer appeal. However, if O2 can come up with an intuitive and simple pricing model for its low-power GSM home base-station (something like Genion for instance) it should have a small hit on its hands. BT is sensibly focusing Fusion on the enterprise now.
  8. MVNOs will continue their onward march. MVNO competition will bite in France, depressing ARPU. Similarly E-Plus’s aggressive wholesale strategy in Germany will see it gain market share. MVNOs in Spain won’t have a substantial impact until 2008 though.
  9. Consumer mobile IM and email won’t take off. Mobile operators are scared of alternative messaging applications due to fear of cannibalisation of SMS. As a result offers remain mostly unattractive (including per-event charging). This will largely persist in 2007.
  10. Carphone Warehouse will suffer. Vodafone withdrew the rights to sell its contracts (although they can do upgrades) and its name is mud with everyone who tried to sign up for its free broadband offer.

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