Data Crush

How the Information Tidal Wave is Driving New Business Opportunities

 Data Crush

Author: Christopher Surdak
Pub Date: February 2014
Print Edition: $27.95
Print ISBN: 9780814433744
Page Count: 288
Format: Hardback

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Excerpt

1

Mobility

Smartphones, Tablets, and

the “Internet of Things”

AS OF 2013, if you’re a typical American, there’s about a 60

percent chance that you’ve got a smartphone in your purse or

pocket. You use it to tweet with colleagues, shop for goods, take

photos, and make videos to share with friends. Perhaps you use this

same device to play games while you’re waiting in line to buy a coffee

at a store that you found on Google maps. You may be using an

electronic coupon sent to you by an “app” that you recently downloaded,

based upon recommendations from some of your “friends”

on Facebook. And, you may synchronize this smartphone with your

home computer, work laptop, and spouse’s smartphone using a cloud

computing service.

It’s a pretty remarkable thought that all these activities were unheard

of just a decade ago. Indeed, it wasn’t that long ago that people

used their cell phones just to talk to one another. Today, cell phones

are bringing dramatic shifts to every aspect of our lives. In fact, according

to Google, one in seven online searches now originates from

a mobile device and 72 percent of smartphone owners use their

phones to enhance their shopping experiences.

Mobile computing, made possible with smartphones, is perhaps

the fastest growing and most prolific form of technology in human

history. In terms of adoption, mobility is right up there with the

creation of fire and electricity. In 2010, 4.5 billion people worldwide

owned a mobile phone. Remarkably, in that same year, only

4.2 billion people owned toothbrushes. In 2012, between 1.5 and

1.7 billion phones were sold worldwide, meaning that one-fifth of

the total human population bought a new phone that year. And, by

2013, the number of mobile users had grown to over 6.8 billion,5 or

almost 90 percent of all humanity. Indeed, mobile phones are no

longer a luxury. Rather, they are an individual’s dominant point of

interaction with the modern world; an item that is so critical to our

lives that we’ll forego other needs to stay connected.

Mobile phones are so deeply integrated into our day-to-day lives

that it’s hard to imagine a world without them. As a result of this

level of adoption, the market for mobile communications now represents

$1.3 trillion, or approximately two percent, of the world’s

Gross Domestic Product (GDP). And the growth of this market is

far outpacing the growth of GDP in general.

Traditional cell phones (dumb phones, if you like) are still the

majority of those in use throughout the world (approximately 70

percent of all phones), but smartphones are rapidly taking over the

mobile market. While the total annual sales of mobile phones has

seemed to peak due to market saturation, significant numbers of users

are trading in traditional mobile phones for smartphones. Indeed,

the market for smartphones has turned the mobile industry on its

mobility ear, with new players Apple and Google completely annihilating

former stalwart mobile players, such as Nokia and Research in Motion

(RIM).

Today, it’s difficult to remember just how much Nokia and RIM

dominated the mobile industry only a decade ago. In 2000, I was

one of the millions of people caught up in the craze for the ultimate

fashion-statement phone: the chrome-plated Nokia 8810. Although

this “dumb phone” retailed for nearly $1,000, Nokia couldn’t manufacture

them fast enough. Even famous-for-being-famous celebrity

Paris Hilton was an early adopter. And, of course, there was the

Nokia 7110 with which Keanu Reeves costarred in the movie The

Matrix.

Nokia saw its fortunes change as phones became smarter and

users grew to care about function as much as form. Nokia invested

a great deal of time and energy into expanding the functionality of

its phones, but it seemed that the company was trying to take giant

leaps by creating an entirely new operating system: Symbian. While

users wanted more functionality (phones like the BlackBerry, which

could send and read email), they didn’t necessarily want to learn a

whole new operating system to obtain this capability. As such, Symbian

languished in obscurity, and few people bought into the big,

heavy, and complex phones on which it ran.

As for RIM, its BlackBerry was the technological precursor to the

smartphone, allowing users to access email as well as make calls and

text. Again, the BlackBerry was a major fashion statement, and Paris

Hilton quickly changed over to this new superphone. So addictive

were the new capabilities of this phone, that it quickly gained the title

of “Crackberry,” after the highly addictive, cocaine-based street drug.

The BlackBerry was THE phone to own as late as 2008, when presidential

nominee Barack Obama refused to surrender his “Crackberry”

to members of the Secret Service, despite their concerns over

his privacy and security. The Crackberry was so addictive that in the

early 2000s, I had a manager with whom you could not make eye

contact during a discussion because he was so busy reading his email

on his Crackberry.

Skip to the year 2012, and both Nokia and RIM are in deep

trouble. RIM continues to press forward with an independent operating

system on its phones, despite seeing its market share drop

from a high of 44.5 percent in 2008 to a recent low of approximately

4.6 percent in 2012. Nokia has been forced to largely abandon its

own smartphone operating system and has cast its lot with Microsoft’s

Windows Mobile 8 operating system. Nevertheless,

Nokia has seen its global market share plummet by over 25 percentage points

in just a decade—and this in a market that has tripled in size during

the same period. Combined, these two companies have lost approximately

$200 billion in market value in the last 10 years,9 a dramatic

loss in net worth caused by their failure to foresee the explosion of

smartphones. The reasons for this massive upheaval in the mobile

industry are both obvious and compelling. Smartphones can deeply

enrich our lives at so many levels, and this transition reveals itself in

looking at the growth of mobile data services, mobile apps, and location

services.

Mobility and Data Growth

Which aspects of mobility are leading to the explosive growth in data

volume? Four primary drivers of data growth are caused by mobility:

pervasiveness, connectedness, data enablement, and context. Let’s

look at each of these drivers in turn.

First, there is pervasiveness, also known as the network effect.

With more than six billion cell phone users on the planet right now,

there is always someone you can talk to and always something to say.

And, most of us take advantage of this pervasiveness all of the time.

For example, in the United States in 2012, 34 percent of homes no

longer had a land line phone. Rather, the inhabitants of these

homes simply rely on their cells phones to remain connected to the

world. Total voice service usage was over 2.3 trillion minutes in the

United States in 2012 and was growing steadily at three percent

year over year.

Combining pervasiveness with the second driver, connectedness,

means that whenever you might have something to say it is highly

likely that someone is willing and able to listen, no matter how inane

the conversation might be. Not only are nearly six billion people

connected to the network, they are connected almost perpetually

and can interact with other people 24 hours every day should they

choose to do so. Perhaps you’ve noticed the impact of connectedness

in your work life, where the old standard 9-to-5 workday has

been replaced by a workday that seems endless. In my work, it is not

uncommon to have teleconferences that begin at six in the morning

(because I need to talk with people in Europe) and continue on into

the evening (because I need to talk with people in Asia, who are just

beginning their next work day). Because of my connectedness, I

have far greater opportunities to generate more and more data.

The more than 2.3 trillion minutes of talk time that American

mobile phones supported in 2012 translates to about 10 hours per

month for every person. So, it’s safe to say that mobile phones are

still used for voice communications. However, data communication

has become increasingly important to users, as is shown by the over

2.27 trillion text messages Americans sent to each other in 2012.

Both text message and voice traffic are growing at about three percent

per year, indicating that they have reached a point of saturation—at

least for now. These forms of traffic are expected to continue to grow,

albeit more slowly, as more and more users communicate with each

other through social platforms like Twitter and Facebook.

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