It’s that time of year, and advisory firm inCode is taking its annual stab at predictions.
One of the firm’s predictions for 2009 is tough economic conditions will reduce the number of major wireless operators and infrastructure vendors. On the carrier front, AT&T and Verizon Wireless continue to jockey for top position by growing organically and acquiring other carriers, the firm says.
Smaller carriers such as Leap Wireless International, MetroPCS and U.S. Cellular will post gains, but the ones caught in the middle – Sprint and, to a lesser degree, T-Mobile USA – will be vulnerable. “The guys in the middle are being pressured from both sides and they don’t have a specific competitive advantage that allows them to defend their territory,” said Rob Prudhomme, vice president of Practice Development at inCode. Sprint is in a situation where larger factors beyond the company’s control may ultimately determine how things turn out, he said.
The cord-cutting trend may accelerate even more in 2009 as people see more utility in having a mobile phone rather than a fixed line, he added. That trend favors Metro and Leap.
A prediction that probably is not surprising is private equity investments will slow, which might open up startup investments from more traditional Internet companies, like Google. Less money will be available from venture capital firms, so startups might look to the Internet giants for their funding. In addition, some companies that might have survived in normal times will struggle for survival and could be acquired at firesale prices, Prudhomme said.
Apple’s iPhone raised the bar for an acceptable browsing experience, and Apple will continue to produce innovative products, but inCode predicts a leading device innovator or new entrant will introduce a model that closes the user experience gap with the iPhone. That launch will come from a leading OEM (like Samsung, LG, Motorola, HTC) and select Tier 1 global operators or device OEMs with strong service integration, such as Nokia (with Ovi) or Research In Motion (RIM) with BlackBerry.
inCode also predicts that at least one of the Tier 1 or 2 carriers will outsource labor-intensive functions, such as network planning, designing, buildout and operations, to an OEM/services partnership. Companies like Ericsson and Nokia Siemens Networks were proposing outsourcing years ago; now that they’ve worked out the business model and gained experience, they’re in a better position to take over for a larger carrier, he said. Any of the operators could be a candidate, but the ones under the most financial pressure are the most likely to pursue that model.
And while a lot of activity will continue around social networking, the mobile apps that make money are location-based, he said. People are used to social networking online for free, but they’ve demonstrated a willingness to pay for location-based services.
