2018: Through The Looking Glass


What will the mobile industry look like four years from now? The mobile economy is booming, growing at an even faster rate than expected. Recent research by U.S. analysts the Yankee Group predicts that by 2017 it will be valued at $3.1 trillion. That multi-trillion-dollar market is starting to take shape as key enablers, crucially low-latency, high-speed mobile broadband, start to become a reality. According to the Yankee Group, the broadband market itself is expected to account for $1.12 trillion by 2017.But it is the services the broadband infrastructure will enable that will generate the most revenue — and much of that will be taken by interlopers from the Internet sector such as Apple, Google, and an army of developers and entrepreneurs, rather than the mobile operators themselves. It is telling that Mark Zuckerberg will give a keynote address at Mobile World Congress this year. Facebook now earns a hefty portion of its revenues from mobile and is having an outsized impact on the industry.

Privacy Frameworks Needed

And, established players in the industry are finally recognizing the importance of bringing innovation in from the outside and giving start-ups their due. Large operators, such as Telefonica and Orange, are stepping up efforts to collaborate more closely with young companies, while the GSMA is co-sponsoring — for the first time — a conference within a conference during MWC called Four Years From Now, which is focused entirely on entrepreneurship and innovation. 4YFN, which is expected to attract over 1,200 start-ups and investors, will highlight some of the hottest new mobile start-ups and try to predict what the industry will look like by 2018.

"More than 2.23 billion people worldwide, or 48.9% of mobile phone users, will go online via mobile at least monthly in 2014, and over half of the mobile audience will use the mobile Internet next year."


In this issue of Informilo we look at the effect mobile will have on the gaming sector, which will contribute a significant amount to the $145 billion that apps and cloud are expected to generate; on mobile finance and commerce — predicted to account for $906 billion; and on the devices themselves, another $919 billion market. We also look at the wireless technologies that will underpin the Internet of Things.

The ubiquity of mobile phones could help solve some of the world’s most pressing problems, such as access to healthcare and education; they are also invaluable in disaster relief. However, as information released by the former U.S. National Security Agency contractor Edward Snowden has shown, the potential for substantial loss of privacy and intrusion is greatly multiplied by location-aware devices that are always with us. Such issues will require new privacy frameworks and political mechanisms to protect consumers without curtailing the benefits. 

Network Congestion Up Ahead

The reality of an always-on, always-connected digital future hangs on the ability of a network to deliver. But networks are already struggling to cope with ever-increasing data demands from smart devices and will have to weather the double blow of not only more people coming on line but, as smartphone technologies improve, everyone consuming ever more data.

Google Glass: Analysts at Juniper Research predict that by 2018 smart glasses such as Google Glass will reach 10 million annual shipments, up from 87,000 last year

According to a January 2014 report by eMarketer, more than 2.23 billion people worldwide, or 48.9% of mobile phone users, will go online via mobile at least monthly in 2014, and over half of the mobile audience will use the mobile Internet next year. The rate of growth of smartphone penetration may be slowing but assuming trends continue as projected by eMarketer, then the total number of mobile internet users globally will top 3.3 billion by 2018, a 48% increase from today’s projected figures.

However as a 2013 report (Smartphones Trump Tablets — Recent trends in extreme data) by network specialist Arieso showed, in the four years between the release of the iPhone 3G and the iPhone 5, data consumption per device increased 400%. Although iPhone data growth was faster than that of other devices such as Android or Blackberry, even conservatively the amount of data consumed per device increases by a factor of between 1.5x and 2x every two years.

If that rule holds true then between 2014 and 2018 networks will have to cope with 48% more users than today who could together consume anywhere between 300% and nearly 600% more data.

The reality is that today's one-size-fits-all network structures are simply not going to be able to cope, says Daryl Schoolar, Principal Analyst, Wireless Infrastructure, at research firm Ovum.

5G For Unicorns Only

"There will be a hetnet," he says. Hetnets — short for heterogeneous network — deploy a mix of technologies, frequencies, cell sizes and network architectures — everything from today's conventional macro cells (think a traditional cell tower) through to small, local cells (anything from domestic picocells to microcells covering larger shared areas such as shopping malls) as well as Wi-Fi connectivity.

"Globally speaking more people will still not be on LTE than will be on it, even in four years' time"

Daryl Schoolar, Principal Analyst, Wireless Infrastructure, Ovum

What this means for developers is a much more complicated picture than exists today. "Mobile applications will have to run across macro cells, small cells that support licensed spectrum or even a carrier-wide Wi-Fi points." While hardware will handle the mechanics of switching, Schoolar points out that the features offered by each type of cell may not be equal. For example, technologies to reduce the network burden on macrocells, such as content caching, may not be available on microcells or Wi-Fi. Developers would be wise to work with network operators on optimizing their applications, he suggested.

Schoolar says the underlying cellular technology will still be LTE. The much-talked-about 5G technology (see below) "will still be a unicorn. I don't expect anything on that for at least a decade," he says.

Instead, he expects LTE-Advanced to help manage demand. LTE-Advanced can — theoretically, at least — offer download speeds up to three gigabits per second and upload at 1.5 Gb/s. (By comparison, LTE maxes out at around 300 Mb/s for down and 75 Mb/s up.) But importantly LTE-A also includes new transmission protocols and multiple-antenna schemes that enable smoother handoffs between cells, increase throughput at cell edges, and greater data density per hertz of spectrum.

By 2018, according to ABI Research, global LTE-Advanced connections will approach 500 million — about five times as many as LTE can claim today.

Even so, "globally speaking more people will still not be on LTE than will be on it, even in four years' time," says Schoolar.

But he predicts that despite advances in technologies and better traffic management, the problem of network congestion will still be as big an issue in four years as it is today. "It is a bit like building a new lane on a highway to alleviate traffic. In a few months that lane is as congested as the old ones were," he says.

Handsets: Will The Eyes Have It?

If we look forward to 2018, what can we expect in the way of devices? According to analysts, don't expect too much to have changed in your smartphone.

Since 2007 and the iPhone every smartphone has been a variation on a theme by Jobs: rectangular, with a touch screen (some with, most without, a physical keyboard).

"Essentially we have something like a TV or a washing machine — a very established paradigm," says Ben Woods of research firm CCS Insight.

Pebble and Samsung smart watches: Estimates of the size of the wearable market by 2018 vary from $19 billion to $30 billion in revenue

Picture: Kārlis Dambrāns (Creative Commons)

But if the form factor isn't going to change, what about how we interact with the device? 2018 will see at least two more iterations of Moore's Law, resulting in a four-fold increase in available power. ARM, the predominant designer of smartphone chips, has already introduced 64-bit designs such as Apple's A7, found in the iPhone 5S; Samsung has hinted it may follow suit. While the switch from 32- to 64-bit architecture does not itself deliver huge benefits, by 2018 the operating system and other necessary tweaks will be long established. How will that be used?

At the start of the year Intel created a buzz with its announcement of on-device speech recognition. With a hat tip to Iron Man, the device, called Jarvis, uses Intel's mobile processor rather than services such as Apple's Siri, which relies on cloud-based processing.

His Master's Voice

Don't expect too much, says Tony Cripps, a principal analyst at Ovum. "In most instances there are better and more efficient ways to get to the kind of information that you want with the kind of interfaces available today.

"One of the issues with it is that it is not really reliable relative to using a touch screen interface. You can be pretty sure that when you interact with your [touch screen] device it does what you expect it to do. We are not at that kind of level of reliability with voice."

If voice won't be used as a primary interface, can it be used to augment the way we interact? One Israeli start-up, Beyond Verbal, hopes to tap into increasing computing power with a service that can understand, and react to, your emotional state. The company has already launched an iPhone app, Moodies, which uses voice analysis to understand a user's state.

Other interfaces have shown promise. Samsung launched a version of its popular Galaxy smartphone with eye tracking built in, but it only worked on Samsung's own apps. An Israeli start-up, Umoove, is making its technology available to any developer on any platform with any phone that has a camera.

Wearables: 'It is the Wild West. It is totally up for grabs'

The aim, says Umoove Co-Founder Tuvia Elbaum, is not to replace existing interfaces, but to add to them. "There are times when it is easier to use touch, but plenty of times, say when scrolling through a long list, using eye tracking is a lot quicker and easier," he says.

If smartphones aren't going to be subject to any major burst of innovation, what will? The obvious market primed for a Cambrian explosion is wearables. "It is absolute chaos," says Woods. "It is the Wild West. It is totally up for grabs."

According to Juniper Research the global market for wearable technology will hit $1.4 billion in 2014 but by 2018, that figure will top $19 billion. Smart glasses such as those using Google Glass will reach 10 million annual shipments, compared with around 87,000 last year, the company predicts. A 2013 report by IMS Research was even more bullish. By 2018, analysts predicted, unit shipments are forecast to reach 210 million, driving $30 billion in revenue.

But Morgan Stanley trumps both of them if Apple's widely-predicted iWatch goes on sale. Given Apple's appointment of leading figures from the fashion and medical industries — former YSL CEO Paul Deneve, medical devices specialist Michael O'Reilly, and ex-Nike design director Ben Shaffer — that's not unreasonable. Morgan Stanley analyst Katy Huberty predicted $17.5 billion in sales of the iWatch alone in its first year.

Technologies on the horizon

Quantum dots

Quantum dots are tiny nanocrystals, produced either inorganically using chemicals such as zinc sulphide, lead sulphide, cadmium selenide and indium phosphide, or organically using peptide strings. Varying in size from 2-10nm, dots have a variety of applications, from displays through to high-capacity batteries and even medical applications.

In displays, dots can be made to emit light at particular frequencies with exceptionally high efficiency, making them an attractive proposition.

Demonstrations of organic dots, from the Israeli start-up Store Dot, showed that a battery could have a five-fold increase in power. Applications could include a mobile phone battery that can be fully charged in seven minutes.


5G, is the name given to the next generation of mobile devices. Although still in concept at the moment, 5G specifications call for:

  • Immersive experience: at least 1 Gb/s or more data rates to support ultra-HD video.
  • Fiber-like user experience: 10 Gb/s data rates to support cloud services.
  • Zero latency and response times: less than one millisecond latency to support real-time mobile control and vehicle-to-vehicle applications and communications
  • Zero-second switching: sub-10 millisecond switching time between different technologies to ensure a seamless delivery of services.
  • Massive capacity and always-on: need to support several billions of applications and hundreds of billions of machines.
  • Energy consumption: energy-per-bit usage should be reduced by a factor of 1,000.

No one technology can deliver that, to say nothing of the huge demands to be made on spectrum, so 5G is likely to comprise a heterogeneous network of small cells, Wi-Fi, LTE and other new technologies.

Others are less certain. "We are in this chaotic period of extreme innovation. This is either the Emperor’s new clothes, we will find out in two years that we have a smartphone and — some of the fitness devices aside — we don’t need all of these devices, or else they really do change our lives," says Woods.

One Code To Bind Them All

Underlying any discussion of devices is the inevitable battle of the operating systems and manufacturers. Hopes that fragmentation will have eased and the emergence of "one code to bind them all" in the shape of HTML5 are misplaced.

"We are unrealistic if we think there is going to be some common language like HTML5 that will just deliver content from a three-inch screen to a 300-inch screen," says Woods.

Even with the increased power that will be available to designers by 2018, which should help address some of the problems that the technology has encountered, Woods remains unconvinced, citing the problems that Facebook encountered in mobile. COO Sheryl Sandberg blamed the company's tardiness to embrace mobile on backing HTML5 instead of going native. It dropped HTML5 in August 2012.

"Their efforts were very commendable," he says. "But I could not make a business case to put significant resources to HLTM5 today, or in four years."

Instead, the landscape will remain as it is today — native apps divided between the two giants, Apple and Google, with Microsoft a distant third. No one is predicting an end to the duopoly.

Finally, what handset makers can we expect to see surviving the next four years? If history is a predictor of the future, then manufacturers lacking a broad and diversified portfolio of products across multiple device categories are going to suffer. "Manufacturers that are only smartphone makers — there is no reason to think that life is going to get any easier in the future," said Cripps.

More, Simpler and Smarter Apps

Predicting the kind of services that will be available on smartphones and connected devices is nigh on impossible. But there are some macro trends that are beginning to emerge.

Given the unlikelihood of HTML5 gaining any real traction, native apps will continue to be the dominant way users will interact with services. Analysts Gartner Group predict that by 2017, mobile apps will be downloaded more than 268 billion times, generating revenue of more than $77 billion. Mobile users will provide personalized data streams to more than 100 apps and services every day; 50% of those interactions will take place from wearable devices.

Users can expect to see more, but simpler, apps, says Ciarán O'Leary of Berlin-based Venture Capital firm Earlybird, "We will see a move from rich, complicated applications, to extremely narrow and simple ones. Facebook's Paper app is an example. Look at WhatsApp; why is that so successful compared to some of the much more powerful applications?"

This point is echoed by analyst Benedict Evans, who wrote: "On a smartphone, it's almost always easier to press the 'home' button and launch another app than dig into an app's own menu system."

But apps will need to get a lot smarter, said O'Leary. We will see "applications that serve you. Take Foursquare. You used to have to check in. Now the only reason to go to Foursquare is to get tailored recommendations based on your history, your friends, what is trending. Or look at Google Now. This understanding of what the user wants will apply to all verticals. This whole philosophy of serving will be huge on mobile."

Through The Looking Glass

To date attempts to overlay real life with an information layer have been clumsy, relying as they do on holding up your smartphone and using its camera and screen. As a result it is technology that, for consumers at least, has struggled to gain traction.

InfinityAR CEO Elon Landenberg: The Israeli company is building the software technology that integrates augmented reality functionality into hardware devices

Picture: Dan Taylor/Heisenberg Media (Creative Commons)

However devices like Google Glass, a wearable computer with an optical head-mounted display, offer to deliver on the promise of augmented reality (AR). Already companies such as the Israeli start-up InfinityAR are building the software that integrates augmented reality functionality into hardware devices.

Opinion is widely divided on such devices. Even though the most useful if controversial function, facial recognition, has been ruled out by Google, substantial privacy issues remain.

Brent Hoberman, the co-founder of PROfounders Capital, a London-based VC firm, says a lack of suitable applications has to date hindered AR. But he suggests that while the current implementation of Glass is unlikely to gain widespread adoption, "eventually it will get small enough to be built into your Ray-Bans." Combining that with services like YPlan, which allows users to buy last-minute tickets at theaters and other live events, does make a compelling case, he says.

Earlybird’s O'Leary is less convinced. "Google Glass is not going to be cool for quite some time. For it to be in the consumer space it will have to be a lot less conspicuous." Like many others he flagged up the not-inconsiderable privacy and cultural issues surrounding the device. Not for nothing are users known as "glassholes," he says.

History has a way of repeating itself. As we stand on the cusp of the next phase of communication, it is interesting to note that it was the telegraph, and not the telephone, that did most to change the world. The telephone was, in essence, a better telegraph. It was the telegraph that brought us “instant” news — of wars or stock prices. It was data that transformed the last century. It will be data that transforms this one.




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