Any nascent industry inevitably follows an S-shaped growth curve: the initial period of excitement – even hype – is followed by a period of unfulfilled expectations and pessimism. Eventually reality sets in and the trendsetters tackle the task of re-forging their offering to address the genuine real-world issues.
With hindsight, it is always easier to see things in perspective. Large consumer markets shift course slowly, and profound changes in global telecom infrastructures are not realized overnight. Even if handsets and their related functionality develop at a breathtaking pace, the applications and services follow at a much more leisurely rate. Over time, engineering prototypes and trials (influenced by early adopters) transform the offerings into valuable features and services.
This is where we stand now.
The world of mobile communications is developing rapidly after the difficult years around the turn of the millennium. These changes are driven by over all positive economic trends in addition to industry specific developments. In Europe, carriers are recovering from their substantial investments in 3G network licenses, and Asian end users are replacing their year old handsets with new multimedia marvels. The high adoption rate growth in the influential US market and the high volume Chinese and Indian consumer markets are also amongst the growth drivers.
The global mobile market is very fragmented and shows significant differences between the geographies, with various historical, cultural and legal factors lending each region its unique characteristics. But even if the value chains are diverse and developing in their distinct directions, they have one thing in common – the mobile carriers in each market hold a position of power.
The United States has been relatively slow to adopt mobile technology, so the small yet advanced home markets of leading mobile device manufacturers, like Japan, South Korea and Scandinavia, have been the proving grounds for cutting-edge applications and services. There will be serious competition for user mind share as Silicon Valley and Hollywood start to flex their muscles – as digital convergence seriously goes mobile. The bottom line: Large, rapidly growing, diverse markets equate to huge opportunities for fast and nimble companies.
Some recent news from the market indicates that mobile communications (and mobility overall) is a large and rapidly growing market – it also is changing some communication behaviour. For example, according to a study of Korean youth, they are abandoning email for SMS and IM, a shift pegged to “lack of immediacy” and “mobility of email.” Imagine this, taking place in the country with the world’s highest penetration of broadband Internet!
Another data point suggest that the Finns also have passed a milestone – on a national level, they have had their first day of more phone calls being made on mobile phones than using traditional land lines.
Looking ahead
Mobile users will soon share not only the problems, but also the most successful applications of the PC world. Interesting spaces to watch include mobile Internet search, with both Google and Yahoo having introduced their first efforts. As such, their offerings clearly indicate that there will be ample room for innovative start-ups to enter the scene, as the mobile search market in its different forms could become one of the single largest market opportunities in mobile. Another promising opportunity is to protect mobile users from spam and from viruses – another market ported from the PC world.
Mobile devices will continue to incorporate new hardware capabilities, the most prominent being video functionality, high-resolution cameras, and displays. In November 2005, the European Telecommunications Standards Institute announced the adoption of DVB-H (Digital Video Broadcast - Handheld) as the standard for mobile TV services in Europe. With mobile TV a reality in Japan, the new standard will pave the way for European commercial mobile broadcasting, which is expected to begin in 2006. Add to this the gigabyte capacity of micro drives – soon we will have a complete entertainment system in our pocket.
We are delighted to welcome you to this first issue of Nexit Mobile Insights, and to introduce to you some of the innovative companies that will bring forth the next generation of mobile technologies and solutions. Through this newsletter, we hope to bring value to you, to our portfolio companies and to the mobile community at large.
Thanks for your time and interest.
Artturi Tarjanne
General Partner
Nexit Ventures
artturi.tarjanne@nexitventures.com
Michel Wendell
General Partner
Nexit Ventures
michel.wendell@nexitventures.com
