Follow the mobile money

CS5011/CS4032:

Mobile Computing

Bruce Scharlau, University of Aberdeen, 2013

There are two sides to this coin

Money generated by the mobile ecosystem

Money used by people in their daily lives tied to the use of their mobile

Bruce Scharlau, University of Aberdeen, 2013

Mobile applications reduce friction

Bruce Scharlau, University of Aberdeen, 2013

Smartphones overtake PCs

Bruce Scharlau, University of Aberdeen, 2013

http://www.canalys.com/newsroom/half-billion-pcs-ship-2013-tablet-sales-rocket

http://mobilephonedevelopment.com/archives/1657

Mobile almosts matches population

Bruce Scharlau, University of Aberdeen, 2013

http://communities-dominate.blogs.com/brands/2012/08/the-mobile-moment-is-only-months-away-preparing-for-the-biggest-number-ever-yes-that-day-is-near-whe.html

Mobile applications are becoming more popular

Bruce Scharlau, University of Aberdeen, 2013

http://www.upsidelearning.com/blog/index.php/2012/05/23/6-drivers-of-mlearning-in-the-workplace/

Bruce Scharlau, University of Aberdeen, 2013

There are a lot of mobiles5.5 billion handsets (including1.2bn smartphones) with global population of 6.8 billion

Above 100% mobile rate in developed world59% in emerging world

Emerging world still on WAP for data – this is were 5.6 billion people live

Near New Year’s 2013 will be one phone per person

http://communities-dominate.blogs.com/brands/2012/10/a-look-at-the-handset-industry-market-and-installed-base-in-2012.html

All are SMS capable

Bruce Scharlau, University of Aberdeen, 2013

http://communities-dominate.blogs.com/brands/2012/10/a-look-at-the-handset-industry-market-and-installed-base-in-2012.html

PREVALENCE OF SELECTED FEATURES OF THE INSTALLED BASE SMS capable handsets . . . . . 100%MMS capable handsets . . . . . . 85%Cameraphones . . . . . . . . . . . . 81%Bluetooth . . . . . . . . . . . . . . . . 79%FM Radio . . . . . . . . . . . . . . . . 63%3G or faster cellular . . . . . . . . . 41%WiFi  . . . . . . . . . . . . . . . . . . . 25%Touch screen interface . . . . . . 23%Smartphone . . . . . . . . . . . . . . 22%Dual SIM . . . . . . . . . . . . . . . . . 9%Source: TomiAhonen Phone Book 2012This data may be freely shared

That means 4.4bn camera phones

Price for mobile touch all ranges

Bruce Scharlau, University of Aberdeen, 2013

http://communities-dominate.blogs.com/brands/2012/10/a-look-at-the-handset-industry-market-and-installed-base-in-2012.html

‘smartphones’ are fighting over the 11% band

HANDSET PRICE PYRAMID 2012Premium Smartphones . . . over $450 . . . . 11%Mid-price Smartphones . . . $150-$449 . . . 13%Low-cost Smartphones . . . $80-$149 . . . . 17%Featurephones . . . . . . . . . $40-$79 . . . . . 21%Ultra Low-cost Phones  . . . under $39  . . . 38%Source: TomiAhonen Phone Book 2012This data may be freely shared

Zero to $1trillion in 28 years

• Mobile industry only 28 years old

• Fixed line moving to mobile

• Internet moving to mobile

• Media content moving to mobile

Bruce Scharlau, University of Aberdeen, 2013

Let’s breakdown the 1.1trillion

• 900bn service revenues– 625bn call revenue– 175bn mobile messaging– 100bn mobile data

• 200bn for hardware– 160bn handsets– 40bn network infrastructure

Bruce Scharlau, University of Aberdeen, 2013

SMS makes lots of money

• Mobile messaging is broken down with – 120bn SMS– 35bn MMS

Bruce Scharlau, University of Aberdeen, 2013

Mobile data is bigger than internet

• 275bn data revenues means it’s bigger than internet related advertising, content and access fees (ie broadband and dial up)

• 98bn from premium data (4x what’s paid for on internet)

• 5bn from ringtones (2.5x what iTunes makes)

Bruce Scharlau, University of Aberdeen, 2013

Average RPU is $13/month

• Average phone user pays $13/month– $50/month in US– > $5/month in emerging countries – $1/month in Nigeria and Bangladesh (and

companies still make money…)

Bruce Scharlau, University of Aberdeen, 2013

Over 1 billion new handsets/year

• 1.3bn new handsets a year

• About 16% are smartphones

Bruce Scharlau, University of Aberdeen, 2013

Mobile banking developed most in developing markets

• Right were banking didn’t have vested interests in established practices (leapfrog)

• WAP experiments in 90s not go anywhere

• Czech Republic and S Africa – SMS alert when money being withdrawn from ATM – then nationally in Philippines

• Phone wallets in Japan in early 2000s

• Still developed catching up with developing

Bruce Scharlau, University of Aberdeen, 2013

Virtual money greater in developing world too

• Habbo hotel of Finland the oldest which predated Second Life and has 175mn users all under 15 and generates $75mn from premium SMS for in-game purchases

• Forerunner of Farmville, etc

Bruce Scharlau, University of Aberdeen, 2013

M-Pesa provides virtual <->real interface

• Started in 2006 as banking for unbanked – now 58% use mobile banking

• Deposit real money to account and w/draw or transfer to other m-pesa users via SMS

• No more moving real money around where even $2/day wage was target for theft

• Now represents around 25% of GPD

Bruce Scharlau, University of Aberdeen, 2013

Every phone becomes payment terminal with mobile money

• Swap money via SMS at market, shop, etc

• The change has to come from operators – every phone can authorise payments and evey phone can receive payments

Bruce Scharlau, University of Aberdeen, 2013

Virtual to real change• Buy credits in shop means shops (G-cash, M-

Pesa, Smart Money, etc) can sell you airtime, etc which means they have too much cash

• Let people withdraw money against airtime means cash goes out – solves problem (banking without banks)

• South Korea – most advanced – has credit cards on sim card so can move/pay with phone and not need physical card

Bruce Scharlau, University of Aberdeen, 2013

Mobile reduces crime

• Already mentioned Africa and m-pesa means less crime as people don’t have cash

• Works with machines too: parking meters all mobile in some countries – reduces crime against meters

• Sweden now has mobile bus fares – and end of cash (reduce waste of metal, paper, etc)

Bruce Scharlau, University of Aberdeen, 2013

Mobile applications reduce friction

They make life easierThey make life easier

Bruce Scharlau, University of Aberdeen, 2013