10 Wireless Predictions for 2011

by: Louis Rhéaume

According to Juniper Research, here are 10 top wireless predictions for 2011, followed by my comments.

1. Surging mobile data traffic will continue to test 3G network capacity - As they predicted at the end of last year, 2010 was the year in which the surge in mobile data traffic, driven by the consumer smartphone boom, began to place the 3G networks under severe strain. A number of network operators have responded by introducing tiered data pricing - a trend which will undoubtedly increase - but as smartphone adoption continues apace, network capacity will be sorely tested in 2011. Tiered pricing (and the use of WiFi as capacity relief) may serve to alleviate the problem to a certain extent. But until we see mass deployments of LTE networks (and, equally important, devices that are LTE-capable), then operators face a nervous period of attempting to manage the transition.

Fixed data plans, mainly in the U.S., have seen the exponential growth of mobile data usage. It may become a problem to U.S. wireless operators. 4G networks would probably charge more for data plan according to speed.

2. Augmented Reality to enhance mobile games and retail - Augmented Reality, or AR, has largely been used in local search and reference applications thus far, but is now attracting the attention of the retail industry. Given its potential to geotag products or locations with brand/campaign-specific information, as we near the end of 2010 a raft of major retailers and brands (including eBay (NASDAQ:EBAY), H&M (OTCPK:HNNMY) and Carlsberg (OTC:CGBWF) are releasing apps with an AR element. With Apple (NASDAQ:AAPL) opening its accelerometer and gyroscope APIs to mobile Safari developers, there is also an opportunity for AR-enabled web-based apps. Also expect to see an increasing number of AR-based games – THQ Wireless’ forthcoming Star Wars Arcade: Falcon Gunner likely will be the first of many such titles.

Generation X and Y are avid users of video games. Mobile games is just an extension of their needs.

3. Cloud-based operating systems are launched - So far mobile operating systems have followed their PC-based cousins, the structure for which was formulated when the web was in its infancy. Consequently, with the web having taken off, for some time now industry figures have been talking about the potential for applications to run from a “cloud." Google (NASDAQ:GOOG) announced the start of a new project, the Chrome cloud OS in 2009, and the latest is that it will be launched in early 2011.With network reach and reliability reaching a point where cloud-based solutions can be considered viable, and remote servers already being used to allow the mobile Internet and email, we believe 2011 will see the launch of the first cloud OS for mobile.

While for many people cloud computing represents a hype sector, value-added cloud computing apps are real such as Google Docs online and on mobile Internet.

4. Mobile banking will become a “must-have” when opening a new account - Banks in developed countries will harness the power of the app and the smartphone to provide their customers with a much improved and personalised service experience. The sign-up process will be a simple box to tick in account opening processes (where it isn’t already) from banks that are keen to make life easier for customers by providing the ability to manage their money on the move in what might otherwise be dead time.

I worked 10 years ago on a Canadian mobile banking project. The hurdles were endless. But now banks must move if they don't want mobile handsets and mobile operators becoming the new financial intermediaries. There will be less talk about mobile commerce and more actions with the global proliferation of smartphones (ie. Google's NFC chip mobile payment initiative).

5. Mobile devices begin to replace credits cards - 2011 looks like the year when, in some countries at least, using your phone as a credit card for lower value purchases will become a reality. Google recently announced that NFC (Near Field Communication) technology will be supported in the next release of Android – 2.3 or “Gingerbread," a natural step, given it already offers several mobile commerce apps and services including shopping, coupons and products search. Also, Nokia’s (NYSE:NOK) C7 handset has an NFC chip included, which will be activated in 2011. And rumors of Apple’s next iPhone including NFC refuse to die down. A word of caution: It won’t all happen at once as stores need to deploy contactless readers, and more problematically, all this is dependent on user preference. However, as with Bluetooth and cameras, we will see NFC in new devices whether we want it or not.

6. Mobile handsets become even more sensitive - Locational and sensory features on smartphones, such as accelerometers, gyroscopes and GPS, have been key drivers in application development, and handset manufacturers will be keen to add more “killer” features to devices to give them that edge. With the aforementioned features becoming standard, vendors are already looking to incorporate others, such as proximity, temperature, biometrics, 3D displays and projectors, into their handsets.

Location-based mobile apps with GPS can bring value. But there is still a lot of uncertainty in the value of such start-ups as Foursquare, where you can get the title of "mayor" at your Starbucks location after 20 visits in the month ... and a $1-$2 coupon.

7. Mobile lottery tickets sales to soar, fueled by deployments in U.S., Europe and China - With lottery sales from traditional distribution channels in decline in many developed markets – notably the U.S. – national/state lottery organizers are anxious to explore new means of distribution. Juniper Research believes 2011 is the year when mobile lotteries will hit the mainstream. As consumers across all age ranges become more comfortable with browsing for content and making purchases via the mobile handset, this major hurdle to mobile lotteries will begin to disappear. We expect a raft of mobile lottery launches across the U.S. and Europe, while VODone’s existing service in China (which already has more than 10 million registered users) is likely to experience further significant growth.

Online gaming is huge, mobile gaming is growing and so will mobile lottery.

8. Mobile-specific threats lead to demand for mobile-specific security - With the growing number of open WiFi networks, and anti-virus vendor Kaspersky reporting the first virus designed to disrupt Google’s Android operating system, the risks for smartphone users will increase in 2011. Antivirus and firewalls have been a “must-have” for PC users for some time, and with mobile handset featuring a wider array of connectivity options – and less secure ones – the lure for vigilantes and criminals is even greater. In light of this, anti-virus software vendors such as Kaspersky and McAfee are likely to make a concerted effort to sell into the mobile space in 2011.

It is not a coincidence that Intel (NASDAQ:INTC) bought McAfee in 2010.

9. Buyouts take social purchasing to a new level - Google was heavily rumoured to be keen on purchasing Groupon, a company which sends users offers on products and services, but rather than providing a coupon, manages the transaction, taking a share of the proceeds. We expect a similar impact on this model from a Google acquisition as we saw with mobile advertising when it purchased AdMob.

The intersection between mobile commerce and social network, combined with mass personalization of daily deals, will create a lot of value. Groupon rejected a $6 billion offer because it sold $2 billion in coupons in 2010 and think the value of the firm is much higher. An IPO at the right time in 2011 may crystallize this.

10. More vendors develop a GreenHeart - Sony Ericsson’s GreenHeart mantra lead to the Sony Ericsson Elm, a handset made from recycled plastics and free of hazardous chemicals, and comes with a low power consumption charger, reduced packaging, some eco-aware apps and an e-manual on the phone instead of a printed guide. Given this move, we expect other vendors to go down a similar route, in order to appeal to the increasingly-environmentally conscious consumer.

Becoming more green is a social pressure and a value add for customers.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.