march 9, 2015 recap by fbic gl… · fung business intelligence centre (fbic) publication: ! mwc...

1 Fung Business Intelligence Centre (FBIC) publication: MWC Recap Copyright © 2015 The Fung Group, All rights reserved.

March 9, 2015

• FBIC’s Top News Picks: Highlights on New Wearables and Technology

• FBIC’s Top Session Picks

•Other Favorites

RECAP

March 09, 2015

D E B O R A H W E I N S W I G E x e c u t i v e D i r e c t o r – H e a d G l o b a l R e t a i l & T e c h n o l o g y F u n g B u s i n e s s I n t e l l i g e n c e C e n t r e d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m N e w y o r k : 6 4 6 . 8 3 9 . 7 0 1 7


March 9, 2015

FBIC’s Top News Picks: Highlights on New Wearables and Technology

• HTC’s Vive offers an immersive, transformative, virtual-‐reality (VR) experience that easily rivals Oculus Rift and has a VR headset that allows you to walk around in an 8-‐by-‐8-‐foot space.

• Samsung unveiled its new (post-‐Qualcomm) Galaxy S6 smartphone with dual-‐side curved display, and announced the introduction of Samsung Pay, which will rival Apple Pay.

• LG’s Watch Urbane LTE uses webOS to create an apps menu that doesn’t require a smartwatch for usage but is still able to connect directly to your wireless carrier for all basic phone functions.

• HTC announced its first wearable product, HTC Grip, a fitness-‐tracking device that works with any recent iOS or Android device.

• Huawei made a splash with its TalkBand B2 featuring fashion and luxury options, smartphone pager and tracking and monitoring features and its TalkBand N1, which has a removable face and functions like a Bluetooth earbud.

• Chinese supplier ZTE released a new smartphone that uses biometric information to unlock the screen, incorporating Eyeprint ID from EyeVerify to image the blood vessels in the eye rather than scanning the retina.

• LG unveiled what it is calling the world’s first 4G-‐based smartwatch, with features that include walkie-‐talkie capability and NFC technology, which allows the wearer to tap and pay with the watch.

• Pebble opened up its smartwatch to third-‐party hardware makers, who can build functionality—such as extra power and fitness or medical sensors—into the watchband, rather than the face, in order to keep the watch light and sleek.

• Qualcomm introduced Snapdragon Sense ID, a fingerprint sensor technology that can identify minute details of a fingerprint through the display rather than just the home button. It can be integrated into a number of materials, such as glass, metal and sapphire, and can read through lotion, grease, sweat and water.

• Qualcomm also introduced its new cognitive technology, Zeroth. It incorporates deep-‐learning neural networks into a device’s camera in order to distinguish and recognize types of objects and understand patterns of usage, and then automatically takes action such as adjusting lighting or uploading pictures to a particular social media outlet.

FBIC’s Top Session Picks

HOW THE CHANGING DIGITAL LANDSCAPE IS AFFECTING CONTENT

While traditional software and device companies alike are vying for the eye and consumption dollar of the cutting-‐edge consumer, the question on everyone’s mind is that of content. With technology capabilities increasing exponentially and the application of tech across product platforms exploding, prevailing thought leadership is focused on how to change content to accommodate a rapidly evolving consumer. FBIC’s

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March 9, 2015

team focused on several sessions relevant to this changing landscape: Opening Keynote with Mark Zuckerberg, Digital Transactions and Social Interactions, Content Evolution for the Multi Form Factor Future, Keys to the Connected Lifestyle and MMIX: The Future of Entertainment is Mobile.

OPENING KEYNOTE: MARK ZUCKERBERG

Mark Zuckerberg was the keynote speaker on opening night, and began the evening promoting his Internet.org initiative, a partnership between Facebook and mobile phone companies that is dedicated to bringing affordable Internet access to every part of every country by providing certain basic Internet services free of charge. He was joined onstage by some of those partners—Christian de Faria, CEO, Airtel Africa; Mario Zanotti, Senior EVP, Latin America, Millicom; and Jon Fredrik Baksaas, GSMA Chairman and CEO, Telenor—who discussed the success of their collaborations.

Zuckerberg emphasized throughout the keynote that Internet.org is about connecting people with people and empowering businesses, governments and individuals to build the Internet worldwide. And while Facebook is used as a platform to ease barrier of entry for new Internet users, he reiterated that the real companies driving the change of mind-‐set are the operators who are investing in the program and beyond. The conversation between Zuckerberg, de Faria, Zanotti and Baksaas centered on the value of data, the fact that apps drive data, and the collection and usage of that data as the future of business.

Internet.org has been launched in Zambia, Tanzania, Kenya and Ghana in Africa, and in Colombia in South America. Zuckerberg’s biggest take-‐away from the experience thus far is the lengths people will go to for connectivity. And while Internet.org currently offers services on a “free” (no fee added) basis, the idea is to educate people on the value of the Internet, and on the advantages some paid Internet services could bring to a community in terms of healthcare, jobs and education.

Zuckerberg referred to a “cyber village” in Jakarta where citizens had organized around lobbying the government to allow broad Internet access, sending a global message about the importance of community effort. He also noted that the business of Internet has evolved, challenging businesses to evolve at the right speed to keep pace with it while staying in line with regulatory issues.

When asked about the possibility of cannibalizing revenue sources by offering free, basic access, Zuckerberg indicated that he and his partners have observed that their


March 9, 2015

efforts have had the opposite effect. Rather than trim down services, people are adopting more data. As Internet dependence grows, the influencing factors will be physical connectivity, affordability and attractiveness of services.

Millicom’s Zanotti spoke of the success of quick adoption of Internet.org in Africa and South America, while de Faria of Airtel Africa referred to Facebook as “a good, easy access point…for introducing people” to the Internet. Telenor’s Baksaas said they had seen a 30% increase in Internet use in Paraguay, and a growing penetration of data in their customer base. With the launch of Internet.org in Colombia, the team saw a 50% increase in new data users in the first few weeks. In Tanzania, sales of smartphones have increased by a factor of 10 since campaign launch.

While the panel mainly fielded questions regarding regulation and extended fee-‐driven services, the gist of the conversation was that Internet.org has had the same positive effect on businesses across markets, because consumers’ basic need to be connected and to access the world, is the same across countries, even given varying market realities. The services that drive data usage will be reviewed and analyzed by individual country, and specific partnerships will be built to service consumer needs in each respective country, while driving revenue models.

DIGITAL TRANSACTIONS AND SOCIAL INTERACTIONS

In one of the more exciting panels about digital financial transactions, Chairman and CEO, BBVA; Ryan McInerney, President, Visa; Jeanie Han, CEO, Line Euro-‐Americas; and Niklas Adalberth, Co-‐Founder, Klarna; discussed how mobile payment systems are reflecting a change in the consumer-‐purchasing ecosystem. Moderator David Kirkpatrick, Founder, Host and CEO of Techonomy, asked tough questions about the blurred lines between advertising, purchase and loyalty incentives, and about appropriate privacy platforms for protecting user data.

BBVA’s Gonzalez, when asked about the current entanglement with Google Germany and regulations, responded that within the industry currently, the line of data versus privacy is ambiguous. Corporations aren’t exactly sure where that line should be. Banks specifically have superfluous information about their customers—and data is one of the driving forces helping customers—but the trust component between bank and customer must be securely protected. Finding that balance will determine the successful relationship between the financial institute and the customer.

Gonzalez believes that the current number of global banking customers will double within the next couple years, specifically and exclusively through mobile platforms. Mobile payment options are much more convenient for customers, which explains the expected exponential increase, but these options also stand to destabilize established


March 9, 2015

business models and practices. Visa’s McInerney reiterated the macro implications of more and more consumers conducting financial transactions via their mobile devices, and how that has caused service security to be a global issue.

Gonzalez stressed the need for a global convention on cyber warfare, as digital changes happen at an increasingly fast clip. He also suggested that, although BBVA is a bank, he expects that within a few years the company will view itself as a digital company rather than as a bank. He also stressed the opportunity for collaboration across industries in facing the challenges of a digital-‐banking future.

Han, of Line Euro-‐Americas, changed the tone of the conversation when she gave the audience a presentation on her company’s main offering, a sticker app created after the 2011 tsunami in Japan that was designed to connect people on an emotional level. Within four years, Line has become one of the top three revenue-‐generating apps. The app has 180 million monthly users in 230 countries; sees 13 billion messages exchanged daily, with an astounding 55% message open rate; and has an engagement rate of 94% of all smartphone users in Japan.

Han stressed that the success of Line can primarily be attributed to its ability to meet the emotional needs of consumers who find traditional digital communication lacking the basic connecting factor of human-‐to-‐human interaction. Line is constantly evolving with the goal of being a complete “life platform.”

Because of its success in stickers, Line has been courted by celebrities and brands who want to foster a direct-‐to-‐consumer experience that allows for constant interaction. It recently opened Line Pay, which allows users to make payments to affiliated stores by registering their credit card.

Adalberth co-‐founded Klarna as a unique solution to payment system challenges. The company offers a payment solution that separates the “buying” from the “paying” in the checkout process. With more than 50% of payment transactions (from Klarna-‐affiliated companies) coming from mobile e-‐commerce traffic, those companies nee to make sure there is as little friction as possible for the consumer during the mobile payment process.

Klarna allows the soon-‐to-‐be customer to pay without registering for a mobile wallet or downloading an app. At the checkout page of the retailer’s website, the customer simply enters his or her email, zip code and top-‐line data such as first and last name, and Klarna populates the rest of the form, even if it’s the customer’s first visit to that site. The customer is given a “Buy now” button, and the order is done. No banking or credit card information is exchanged. The order is instantly placed, and fulfillment is immediate. Klarna assumes all risk to the retailer and gives the customer 14 days to settle payment with Klarna. In return, the merchant gives Klarna a onetime percentage fee for the purchased items.


March 9, 2015

Klarna is able to do this by employing 80 analysts and 400 engineers to run an extremely sophisticated algorithm for accessing risk in real time and providing a real-‐time payment option for the customer. For high-‐risk customers, Klarna provides a prepay option.

What Klarna appears to be solving is the very real problem of conversion rates. The normal conversion rate on desktops is between 2% and 4% but drops down to 0.2% to 0.4% on mobile devices. Klarna’s conversion rate on mobile is an astounding 4%—the same as the top average percentage on desktop—and it boasts even higher conversion rates on desktop.

CONTENT EVOLUTION FOR THE MULTI FORM FACTOR FUTURE

In a panel moderated by Jefferson Wang, Senior Partner of the Wireless and Mobility Group at IBB Consulting Group, thought leaders discussed how the evolution of new devices and technology is influencing the way consumers buy and consume, and thus affecting how content is created and targeted across platforms. Speakers were Hugo Barra, Global VP, Xiaomi; Robert Bakish, President and CEO, Viacom; Evan Sharp, Co-‐Founder and Head of Creative, Pinterest; Will Law, Chief Architect, Media Engineering, Akamai; Geir Skaaden, SVP, Digital Content and Media Solutions, DTS; Raj Talluri, SVP of Product Management, Qualcomm; and Brendan Handler, VP, Global Business & Technology Strategy, 20th Century Fox Home Entertainment. They discussed a corporate approach to mining customer data and content demands.

Barra, of Xiaomi, noted that there needs to be an increased synergy between device content and providers, and said that Xiaomi is focused on streamlining through an iterative design process for its customers. To that end, the comppany has created a beta build from 40 million rotating users (out of 100-‐plus million users worldwide) to feed back into their social community through Mi.com.

Viacom’s Bakish observed that the paid TV bundle still represents big value to the company, and will continue to do so, but that the increased use of tablet, phone and other devices for content viewing has given Viacom revenue opportunities with non-‐paid subscribers. And while there may have been a more recent dip in tablet sales, that has not had an impact on the company’s margins. Bakish expressed excitement over the recent rollout of MTV Play, and noted that MTV Mobile has a 3% market share of all mobile users. In another consumer demand-‐lead initiative, Viacom will be launching a subscription-‐based service, Noggin, repurposing content from Nickelodeon’s original cable network.

Sharp, of Pinterest, emphasized the idea of “mobile first” as a driving force behind future content creation, noting that consumers need mobile to use technology to improve their day-‐to-‐day routines. Pinterest (emphasized as a discovery platform or visual search engine of content) allows the consumer to cull and drive content. With more than 30 billion pins and a vast repository of images, the platform should help companies understand how to differentiate their products to the consumer. A full 80% of Pinterest traffic and growth is expected to come from mobile.


March 9, 2015

KEYS TO THE CONNECTED LIFESTYLE

As expected, the Internet of Things (IoT) and the connected lifestyle dominated conversations throughout the congress. In WMC’s Keys to the Connected Lifestyle session, led by Carlos Ghosn, Chairman and CEO, Renault-‐Nissan Alliance; Ralph de la Vega, President & CEO, AT&T Mobile & Business Solutions; Bill McDermott, CEO, SAP; Karsten Ottenberg, CEO, BSH; and Hans Vestberg, President and CEO, Ericsson. The conversation was broken up into three topics: automated cars, mobile and home.

Automated Cars

The question was asked: How is momentum being built in this space, considering that electric car drivers still represent a relatively small percentage of the market? Among the challenges being tackled are longer autonomy and battery life, a stronger infrastructure and a more competitive price.

In the US, one-‐third of the entire electric car market is in one city: Atlanta, Georgia. The next biggest market (outside the US) is Japan, followed by China. Infrastructure is based on regulations, and rather than gas prices being the main push or pull on the electric car market, significant changes in market growth will be determined by how strict governments become on regulating emissions.

Moving forward, all carmakers will be adopting autonomous solutions that resonate with their consumers and reduce human error, currently the cause of most accidents. Ultimately, innovators are moving toward the possibility of a driverless market.

Ghosn, of Renault-‐Nissan Alliance, anticipates that the market will develop and be adopted in steps: • 2016, Wave 1: Autonomous driving during traffic jams with the car advancing in

limited ways by itself, based on regulations • 2018, Wave 2: Automation for highway driving, including changing of lanes • 2020, Wave 3: Autonomous city driving; more complicated ability of the car to

recognize and act upon objects encountered and to make decisions between contradictory options

• 2025 or beyond: Fully automated, driverless car will be a reality, the industry having dealt with the bigger challenges of regulations and cybersecurity

Mobile

AT&T’s de la Vega predicted that the smartphone is well on its way to becoming “the remote control of your life.” By 2020, 20 to 50 billion devices will be connected and controlled from personal data devices. The key challenges will continue to be safety, privacy and seamless integration. Advancements and adoption will also be heavily influenced by regulation.

SAP’s McDermott predicted that new business models will be formed based on networked businesses leveraging devices across business platforms, in real time. Currently, almost 90% of big data is underanalyzed, but as investment continues to be made in innovation, companies will create seamless value chains by connecting personal and business networks.


March 9, 2015

Home

Ottenberg, of BSH, expects all home appliances to be connected to the consumer by 2016, not simply with the functionality of consumers controlling them remotely, but also of adapting them for convenience and simplification solutions. How far out until connectivity within the home fundamentally changes? That will depend on the application of technology, which is most quickly adopted when applied in a utilitarian way. The most eager early adopters in this space are customers in the UK and the US, but the fastest adoption is taking place in China.

One of the simpler solutions currently being implemented in new devices is cameras being placed in new refrigerators and connected to a smart device, so consumers can monitor both their stock and the freshness of their produce. While this utilizes the simplest of technology, it indicates that consumers need clear value-‐added advancements in this space.

MMIX: THE FUTURE OF ENTERTAINMENT IS MOBILE

With 4G on the rise, and consumers increasingly willing to pay for mobile consumption, there are new revenue opportunities for content distribution.

In a session on the future of entertainment, entrepreneur and recording artist will.i.am was joined by David Hose, CEO of Rhapsody, and Philipp Humm, Vodafone’s Regional CEO for Europe. Will.i.am—who’s also known for being at the forefront of approaching wearable tech from a fashion angle—discussed the age of the dominating screen. He referred to the millennial consumer as a “screenager” who is increasingly visual, demands a complete audiovisual experience and pushes brands to rethink their marketing approaches.

He also stressed how important it is for companies to better prepare their corporate digital literacy in order to meet the needs of their consumers.

Rhapsody’s Hose discussed how the company was leveraging mobile adoption. Rhapsody is currently streaming in 32 countries, and 88% of its customers use mobile, while 70% of those customers use mobile exclusively. This change in consumer use is opening up new means of engagement and new revenue models.

Humm, of Vodafone, discussed innovations from an operator perspective. With 200 million devices in use today, he anticipates that half a billion will be in use by 2018. Vodafone boasts a 27% market share, and his view is that content drives data consumption, which leads to data monetization. If, as he believes, the storage of data has permanently shifted to the cloud, then over time Wi-‐Fi usage will shrink as data usage increases.

Will.i.am believes that industries from retail to electronics will find their greatest value in data mining because of the increasing move toward mobile engagement. The question remains: How will industries best leverage the cornucopia of data currently being mined through mobile use?


March 9, 2015

OTHER FAVORITES GSMA INNOVATION CITY Here are some of our favorite finds at Innovation City, where industry thought leaders outline their plans for the future.

A Virtual Reality Tour Through the Mobile Network


March 9, 2015

AT&T Autonomous Driving

GiGA Iisland—A fully connected 5G community


March 9, 2015

Deborah Weinswig, CPA Executive Director – Head Global Retail & Technology Fung Business Intelligence Centre New York: 917.655.6790 Hong Kong: +852 6119 1779 [email protected] Marie Driscoll, CFA [email protected] John Harmon, CFA [email protected] Amy Hedrick [email protected] Aragorn Ho [email protected] John Mercer [email protected] Stephanie Reilly [email protected] Lan Rosengard [email protected] Jing Wang [email protected]

march 9, 2015 recap by fbic gl… · fung business intelligence centre (fbic) publication: ! mwc...

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