Mobile Social Networking

Mobile social networking and the
rise of the smart machines – 2015AD

Innovating consumer services, optimizing delivery
By mobileSQUARED
Mobile social networking and the rise
of the smart machines – 2015AD
Smart trends to 2015: Key survey findings
Introduction
As part of its commitment to offering mobile operators relevant and valuable
applications and services now, and in the future, Airwide Solutions commissioned
mobile research agency mobileSQUARED to survey mobile operators from
around the world on their thoughts on the expected development in mobile
communications over the next five years.
The research took place during June and July 2010 and involved surveying
31 leading mobile operators spanning Western Europe, Eastern Europe,
North America, and Asia-Pac. The results provide insight into how mobile
operators expect the mobile industry to evolve, and offer a glimpse of the
mobile consumer of the future.
Mobile social networking creates a new dynamic

Operators were asked to select what they thought would be the top five most
used apps, as well as the top five forms of communication in 2015.
When the results were broken down, mobile communication in 2015 is expected
to be dominated by the traditional forms of communication – messaging (SMS/
MMS) and voice, according to 87% and 81% of operators respectively.
However, these traditional forms of mobile communication will be complemented
by the phenomenon that is mobile social media. Respondents could select a
number of various social networking options, ranging from the generic term of
social networking, to the likes of Facebook and Twitter. When all of the social
networking options were combined, 94% of operator respondents believed
social networking would be both the ‘most used app’ and the most important
‘form of communication’ by 2015 (see Fig. 1).
mobileSQUARED research reveals that mobile social networking currently
accounts for approximately 50% of all mobile internet traffic in the majority
of developed markets, and well in excess of 50% in a number of emerging
markets. Consumers are using social networking via their mobile as a means
to communicate and the year-on-year growth indicates that this trend looks
set to continue. Much of the mobile social networking traffic is being generated
by smartphones in developed markets, and featurephones in emerging
markets.
Consequently, the Airwide survey results highlight that by 2015, social
networking will not only be the mainstay of mobile internet usage, it will be
elevated to one of the core forms of communication via the mobile, sitting
alongside voice and messaging.
Social networking sites, such as Facebook, MySpace, and YouTube for
example, allow users to browse and send messages across their community.
With social networking now deeply ingrained in the mobile experience, Airwide
believes the mobile industry is starting to witness the creation of a new mobile
dynamic, which by 2015, will see mobile social networking recognized as a
standalone communication channel in its own right.
As such, Airwide believes that the new mobile dynamic of ‘social networking’
will help drive messaging usage and continue to dominate mobile browsing.
Between 4Q08 and 4Q09 mobile web usage across Europe and the US
experienced phenomenal growth.
Figure 1
What do you expect to be the most
used forms of communication and
most used apps in 2015?
Source
Airwide Solutions / mobileSQUARED
The time users are spending on mobile web sites has increased from less
than one minute per day to in excess of 10 minutes. This increase can largely
be attributed to three factors: firstly, network coverage and speed is improving;
secondly, data costs are falling; and lastly, mobile web sites are delivering a
considerably improved user experience, containing more compelling content.
The impact of smartphones on social networking

The mobile industry has changed beyond all recognition in the past three years.
The catalyst for this has been the emergence of the smartphone and, more
specifically, the iPhone. Consumer behavior has not changed enormously,
but the way in which consumers use their mobile device has. The meteoric
growth in social networking has changed how many people communicate via
mobile – moving away from a predominantly voice-based ecosystem to one
built around messaging.
The extension of social networking platforms into mobile has presented
another sea-change for the mobile industry as it will drive mobile messaging
and file-sharing in the near future, raising additional questions around other
aspects of mobile networks, such as security.
For example, Facebook already claims around a third of its total 500 million
users are active mobile Facebook users and, in May 2010, launched Facebook
0, a text-only version of the social network aimed at mobile users in developing
countries with lower-end phones and limited access to mobile data. Now,
Facebook is planning to launch a standalone mobile platform where developers
can distribute mobile apps. The company already offers more than 550,000
web applications and supports around 1 million developers. To put this into
context, Apple recently announced its 300,000th app on its App Store.
Smartphones, such as the iPhone and Android devices, are forecast to soon
be the majority device in many developed markets, driven by incredible
growth. Android devices are now selling over 200,000 per day around the
world (Samsung’s Galaxy S Android smartphone reached 1 million sales in
19 days), while the iPhone 4 sold 3 million devices in the five biggest global
markets in 22 days (136,363 per day).
According to Gartner, smartphone sales in the second quarter of 2010
represented 19% of total sales – equating to 61.9 million, an increase of 50.5%
from the same period in 2009.
Analyst house, Frost & Sullivan claims that by 2015, 54% of all devices sold in
Asia-Pacific will be smartphones – a figure which stood at only 5% in 2009.
Apple may have stolen the early glory, but Google now also views smartphones
as the key ingredient driving the widespread adoption of the mobile web - and
is focusing its development strategy on Android after witnessing the level of
search activity on smartphones rise 500% over the last 12 months. Google’s
chairman and CEO Eric Schmidt believes the company is positioning its
Android mobile operating system to drive revenues exceeding $10 billion a
year bolstered by mobile advertising and content downloads.
With the rise of smartphones closely aligned with the phenomenon of
mobile social networking, it is not surprising that the operator respondents
to the Airwide survey highlighted social networking as one of the core factors
influencing the mobile consumer in 2015. This new dynamic of mobile social
networking will be complemented by other key features, ranging from pricing
to security to marketing.
The Airwide Survey: Key findings
Most used apps

Looking at the headline survey results gathered by the mobileSQUARED research,
we can begin to piece together how the average mobile consumer of 2015 will
behave. Everything is obviously still about personal communication, and the
habits of the mobile consumer in 2015 will be very similar to now with heavy
use of messaging, voice and the mobile internet (see Fig. 2).
When asked specifically about which apps would be the most popular in 2015,
Figure 2
What will be the top 5 most used
apps on the mobile phone in 2015?
Source
approximately 77% of respondents said social networking would be the most

used app, followed by messaging (64%), email ranked fourth (58%), followed
by voice with just over half of all respondents expecting it to be one of the five
most used apps in 2015.
With four out of the top five apps based on communication, clearly
communication-based activity is expected to dominate consumer behavior
in 2015. Breaking up communication’s top billing for apps, was browsing
(excluding social networking), which ranked third with 61%.
After the top five, navigation/maps ranked sixth, with 42% of operators
believing it would be one of the most used apps, followed by camera, video/
TV and music player. The fact that a navigational service is seen as a more
popular service in 2015 by the mobile operators reflects the services’ nature of
‘being mobile’, as well as the growing importance around ‘location’ for mobile
advertising and mobile marketing.
Indeed, the industry’s desire to deliver a compelling mobile advertising
and marketing platform, and enable an end-to-end experience, including
transactions, will be the catalyst for mobile commerce. Presently, only 16% of
operator respondents believe the transactional process will be a top five app
in 2015.
According to the operator respondents, User-2015 will view the mobile device
first and foremost as a communications device – an almost absurd claim, but
when placed into context, with mobile phones now being labeled multimedia
devices and computers, the communication aspect is often overlooked.
Airwide believes User-2015’s mobile usage will be tiered, with services based
on the mobile devices’ functionality, that of communication and mobility (i.e.
location), representing primary usage, and services such as entertainment
viewed as secondary.
The future of messaging

Messaging is expected to become considerably cheaper for User-2015, with
42% of respondents saying that messaging will continue to be commoditized
over the next five years, while 32% thought growth in standalone SMS traffic
would be challenged by messaging via social network sites (see Fig. 3).
Approximately 10% of operators surveyed thought messaging traffic growth
would be driven by marketing activity of brands and businesses boosted by
more targeted campaigns in mobile marketing and mobile advertising.
In the same way AT&T and O2 have bucked the mobile data trend by introducing
usage caps for its heaviest users, 10% of operator respondents believe
operators will explore a similar avenue in 2015 for its heaviest messaging
users.
But when it comes to inspiring innovation in the messaging sector, entertainment
Figure 3
How will messaging evolve over
the next 5 years?
Source
is at the forefront of the operators’ minds, with 65% of respondents opting for
the category that brought the world the Crazy Frog (see Fig. 4). Following
entertainment, 48% of operators thought it would be healthcare and 36%
opted for education and finance. A further 23% believed innovation would
come from the tourism sector. Other areas mentioned in the research included
automotive.
Given that premium SMS as a delivery mechanism for mobile entertainment is
decreasing, this response is somewhat surprising, especially when considering
entertainment in 2015 is expected to be categorized as a secondary service
(based on earlier survey responses).
Airwide believes the present lack of understanding with regard to the
innovation in messaging associated with areas such as healthcare, finance
and education, is reflected in the operator responses. It is fair to say that
messaging innovation in these sectors is only at a nascent stage, and the true
impact messaging can deliver is yet to be realized.
Figure 4
Which of the following sectors will
inspire innovation in messaging?
Source
Operators believe that alternative forms of messaging will primarily be driven

by machine-to-machine (M2M) applications with 43% saying this sector will
be extremely important, against just 28% who believed enterprise services
would be extremely important for messaging (see Fig. 5).
However, a total of 76% of respondents felt enterprise services would be
either important or extremely important, versus only 64% who thought the
same was true for M2M. About 43% of operators thought m-healthcare would
either be important or extremely important, while only 22% thought the same
for m-education.
The operator responses reveal a five-year period of continued commoditization
coupled with the potential challenge of messaging growth from social
networking. While the likes of Twitter and MMS have all but been discarded
as major potential revenue generators in 2015, operators are confident of
innovation emanating throughout the services sector, driven by a growing
need for M2M and enterprise services.
Biggest inhibitors of value-added services
Figure 5
Please identify the level of
importance alternative forms of
messaging will have in 2015?
Source
The biggest barrier to the adoption of new optional mobile services is pricing,
with 64% of mobile operators viewing it as an inhibitor. This compares with
55% for ease of use and 39% for connectivity. Device operating systems came
in at just 26% surprising given the current demand for Apple and Android
devices. Security is obviously a major issue for operators, but is ‘expected’
from the consumer perspective and therefore does not figure high on the list
(see Fig. 6).
Interestingly, given the role of services like navigation and mobile marketing
and advertising, which rely heavily on a data exchange between the user and
the network, the operator respondents did not identify security and privacy as
inhibitors, with only 10% and 7% opting for the categories, respectively.
Airwide believes it is testimony to the existing infrastructure and accompanying
software providing secure activity across mobile networks. This allows
operators to view services such as security and privacy as a given – and
therefore not one of the primary considerations for the majority of mobile
consumers. Whereas, the more ‘public facing ‘components like pricing and
ease of use, which do have a direct impact on the adoption of optional mobile
services, can be directly influenced by the operators.
While pricing is seen as the biggest inhibitor to the adoption of new services,
Figure 6
What are the two biggest inhibitors
to the adoption of new optional
mobile services?
Source
operators believe it is the availability of competitive data tariffs that will
engender loyalty in the end-user. Eighty-four percent believed that competitive
data tariffs were the single most important factor in building loyalty with a
consumer, while 74% believed network quality was also an issue (see Fig.
7).
In third place on the loyalty list – and chosen by just 45% of operators – was
competitive voice tariffs. Although price of entry has always been an issue in
the success of mobile operators, and mobile services, the imperceptible slide
from cheap voice, to bundled messages, to cheap data is accelerating to the
point where voice and SMS may become totally commoditized.
As with the previous question, services such as fraud protection and privacy
have largely been overlooked by the operator respondents, in terms of what
they expect will influence the mobile consumer in 2015. The fact that services
such as fraud protection and privacy do feature on the operator responses,
but are not expected to be a consumer priority, is largely due to the protection
already afforded all mobile consumers by existing infrastructure and the
measures deployed across the majority of operator networks.
But these networks are under increasing pressure. With an ever-growing
number of smartphones on the network, smartphone signalling is placing
an increasingly heavy burden on the network. Many of the most popular
apps such as social networking and email require constant updates from
the network, and each update can generate around 21 signalling messages,
roughly equivalent to one voice call.
However, a smartphone typically updates every one or two minutes which
Figure 7
What services would make a
mobile user remain loyal in 2015?
Source
would generate signalling traffic comparable to 1,000 voice calls each day. To
maintain network quality for smartphone users and data-hungry applications,
operators will need to spend more on maintaining and evolving network
infrastructure which creates intense pressure on margins when coupled with
consumers looking to pay less for services.
When linking these findings regarding pricing and network quality with the
earlier results surrounding the phenomenon of mobile social networking,
networks are coming under increasing pressure from exponential rises in
traffic due to the lowering of data costs.
Consequently, Airwide believes that operators will soon be under immense
pressure to upgrade their network to meet the rising tide of consumer
demand, while operating within a financial backdrop of tightening capital
expenditure. Piecemeal upgrades perhaps provide the most amiable solution
for operators.
The mobile operators surveyed were a little less sure about the future of billing.
The single largest group of operators surveyed (48%) believed the average
consumer would spend most of their mobile money on flat-rate data plans
plus free services (see Fig. 8).
This is a long way away from the buckets of minutes, bundled voice and text
services, or bundled data plans currently on offer and could be a watershed
for the industry if voice becomes a free bolt-on to data.
Figure 8
How will the average consumer
spend their mobile dollar in 2015?
Source
The future of voice as a chargeable commodity has long been debated around
the advertising model, although only 3% of respondents thought that virtually
everything would be ad-funded in 2015. Subscription plans were favoured
by 29% of respondents, followed by flat-rate data with 13% and pay-per-
download with just 7% of the vote. Only 29% of operators thought we’d still be
using traditional subscription plans in 2015, with just 13% opting for flat-rate
data.
Mobile marketing & advertising

According to 61% of operators surveyed, coupons and vouchers are forecast
to be the most widely accepted form of mobile marketing and advertising come
2015. Approximately 58% of operators also believed that SMS and MMS-
based messaging will be one of the top three forms of advertising, followed by
search with 45% (see Fig. 9).
As already revealed in an earlier question, 10% of operators believe messaging
will become driven by brands and business marketing. User-2015 is more
likely to utilize mobile marketing or advertising promotions sent using coupons/
vouchers and SMS/MMS rather than search, display or navigation, according
to the operator respondents.
Because of the close association between coupons and vouchers and
messaging, with the latter being the distribution channel for the former in the
majority of cases, it is understandable why both categories attracted a similar
response from the operators.
For instance, UK mobile subs send over 11 million SMSes per hour,
amounting to 7.7 billion SMSes per month. That represents up to 15.4 billion
engagements between consumers and the SMS medium every month (i.e.
send and receive).
Airwide believes messaging is the ideal platform to unlock the potential of
mobile advertising and marketing, a practice which requires users to opt-
in. Operators are now starting to run opt-in ad messaging services and not
surprisingly, are placing heightened importance on attracting consumers to
the service.
Figure 9
Which 3 forms of mobile marketing/
advertising will be the most widely
accepted by consumers in 2015?
Source
However, operator respondents clearly expect significant mobile marketing

and advertising activity in the future, making the opt-out option an important
component in User-2015’s mobile experience (see Fig. 10).
Figure 10
What is more important to you in
2010 and 2015: opt-in or opt-out?
Source
Customer profiling
The majority of operators (53%) believe that the customer should control and
update their user profile in 2015, while 40% think it should be a combination
of end-user and operator (see Fig. 11).
Figure 11
Who should control and update a
user’s profile?
Source
This is significant given Fig. 12, which shows operators placing much more
importance on their customer databases in 2015 than they do currently. In
2010, only 24% of operators said they believed their customer database to be
extremely important, while 72% admitted it was important.
The problem with many marketing campaigns to date has been with the
customer profiling as much as anything else. Beyond device type, account
type (contract/prepaid), roaming patterns and data usage it was hard to
profile users before the advent of smartphones where cookies can track app
downloads and usage.
Figure 12
What level of importance will
operators place on customer
databases in 2010/2015?
Source
The fact that operators believe, or want, the end-user to be in charge of their
profile in 2015 will place significant more value on the data. Not only will the
end-user be able to update their personal profile, likes and dislikes, they
could also include their ‘favorites’ and forthcoming plans, such as a holiday.
Operators applying this information for marketing purposes, for instance, will
increase the relevancy and context of the message delivered to the end user,
and therefore increase the value of the message to the end-user.
In 2015, 80% of operators believe their database will be extremely important
versus just 20% saying it will be important. A majority of operators (64.5%)
also believe that personal and financial data will be stored on both PC and
mobile in 2015, against just 13% who say PC only and just 3% who say mobile
only. Just over 45% thought it would be stored by a bank.
With more sensitive and financial data being stored, used and accessed by
end users via their mobile phone, the need for device security in 2015 will be
significantly greater than the present. As demonstrated with earlier findings,
protection, privacy and security have been critical components of mobile
networks, but these must now be extended to the device to ensure users can
operate safely and securely in a trusted ecosystem (see Fig. 13).
Figure 13
Where will users store personal
and financial data in 2015?
Source
Conclusion
The mobile consumer in 2015

mobileSQUARED surveyed leading operators from around the world to gauge their
thoughts on the expected development in mobile communications over the
next five years and the results offer some interesting views on the outcome
of the expected mass-market integration of social networking and mobile.
Source
Taking a view across all the survey questions outlined in Section 2 of this white
paper, we can begin to piece together how the average mobile consumer
of 2015 will look. The average User-2015 will have a smartphone and will
primarily use it for social networking, messaging and browsing. This alone is
worth exploration as all three are inextricably connected from the viewpoint of
social networking.
With social networking sites incorporating both browsing and messaging as
part of their core proposition, by 2015 we would have witnessed the creation of
a new mobile dynamic – one which incorporates various parts of the existing
value chain under ‘social networking’. As such, the new mobile dynamic of
‘social networking’ will drive messaging usage and drive mobile browsing.
User-2015 is concerned with issues visibly affecting his/her usage, such as
pricing and ease of use, rather than the ‘invisible’ services taken for granted,
such as security and privacy, Nevertheless, it is important that operators
continue to maintain security especially as more personal and financial data
will be carried over the networks.
User-2015’s concern for pricing will have a direct impact on competition
between operators, with messaging being lot cheaper for User-2015, and
voice also likely to become more commoditized to the extent that it is free.
User-2015 will subscribe to flat-rate data plans with free services bolted on,
to meet their growing demand for social networking and browsing. However,
User-2015 is less interested in the original forms of mobile entertainment,
such as mobile TV, mobile music, and mobile gaming, which will become
secondary to the core requirements of communication and mobility.
In the communications field, messaging will become increasingly important
as part of the social networking mix, while SMS services are expected to be
boosted by mobile marketing/advertising and mobile entertainment services.
User-2015 is likely to utilize mobile marketing or advertising promotions sent
using coupons/vouchers and SMS/MMS rather than display, while mobile
entertainment services are expected to become much more personalized and
will, therefore, help to drive innovation in messaging.
Because User-2015 will want to be in control of, and update, their own
profile – and opt-out of services, whereas now they would rather opt-in –
mobile marketing and advertising campaigns will be highly-targeted and
more successful, encouraging brands and businesses to incorporate mobile
messaging into their own marcomms strategy.
The mobile operator in 2015

The demands on the operator community are changing rapidly. The importance
of network quality will only intensify as operators try to keep pace with the
growth of smartphones on their networks and the growth in broadband-data
usage centred around social networking, messaging and location-based
mobile marketing and advertising.
Many of the most popular smartphone apps require almost constant updates
from the network and each update can generate 21 signalling messages,
roughly equivalent to a single voice call. With a smartphone typically updating
every couple of minutes, however, traffic from smartphone signalling alone
would be equivalent to around 1,000 extra voice calls each day.
Although the end-user wants to see competitive data tariffs, with 84% of
operators believing this will foster loyalty to the network, 74% also believe
that network quality will be a prime motivator in choice of network. With mobile
broadband services now almost entirely commoditized, the onus is firmly on
the operator to ensure that networks can handle the desired increase in data
traffic – especially in areas of heavy throughput.
Mobile network operators need to balance the demands on capital expenditure
from maintaining service level agreements and improving cell optimization
and backhaul against their own profitability. Many operators have already
scaled back their ‘unlimited’ data packages and introduced fair usage policies
to counter bandwidth-hungry apps, but that is only ever going to be a short-
term measure.
User-2015 wants cheap and ubiquitous mobile broadband, and so does the
mobile content and services industry. Operators are quickly going to have to
come to terms with that, and what it means for their technology choices and
network buildout.
For more information on Airwide Solutions, visit our Web site:
http://www.airwidesolutions.com/
Every reasonable effort has been made to ensure the information and procedures detailed in this document
are complete and accurate at the time of printing. However, information contained in this document is
subject to change without notice.
© 2010 Airwide Solutions Inc.
The copyright in this work is vested in Airwide Solutions and the information contained herein is confidential.
This work (either in whole or in part) must not be modified, reproduced, disclosed or disseminated to others
or used for purposes other than that for which it is supplied, without the prior written permission of Airwide
Solutions. If this work (or any part of it) is provided to a party ("Other Party") under a contract between
Airwide Solutions and the Other Party, then the use of the work by the Other Party shall be governed by
the provisions of the contract.

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Mobile social networking and the

rise of the smart machines – 2015AD

Mobile social networking creates a new dynamic

The impact of smartphones on social networking

The Airwide Survey: Key findings

Most used apps

approximately 77% of respondents said social networking would be the most

The future of messaging

Operators believe that alternative forms of messaging will primarily be driven

Mobile marketing & advertising

However, operator respondents clearly expect significant mobile marketing

The mobile consumer in 2015

The mobile operator in 2015

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