In-Depth
Mobility: The Year Past, The Year Ahead
A look back at the leading mobility trends of the year, and three predictions for 2012.
By Tom Kemp, President and CEO, Centrify
In 2011 smartphone shipments surpassed feature phone shipments and further remade industries. In 2012 smartphones and other mobile devices will remake additional industries
The sheer number of mobile Internet devices (e.g., smartphones and tablets) shipped in 2011 is staggering -- well over a hundred plus million "smart" mobile devices have shipped this year alone. This influx of end users' mobile devices into the workplace, and the corresponding attitude that employees will just go out and buy something that meets their Information Technology ("IT") needs at work, has led to the phenomena known as the "consumerization of IT" and its cousin BYOD ("bring your own device"). This phenomena, in turn, is changing corporate IT and even how companies interact with their customers. In this article I will explore the key 2011 trends in mobility and offer several predictions on where mobility is going.
2011 Trends
Trend #1: Smartphones surpass shipments of feature phones
At a time when the world economy is teetering on going back into a recession and expressions such as "jobless recovery" and "debt crisis" make the front page on a daily basis, there is one area of the economy that is showing explosive growth: mobility. According to research from Morgan Stanley, more than 100 million Android and iPhones alone have shipped over the last year, and in the first quarter of 2011, smartphone shipments surpassed feature phone shipments for the first time in the United States.
The same research shows that in Western European the adoption of smartphones is about a year ahead of the U.S., with smartphone shipments surpassing feature phone shipments in the second quarter of 2010. The Guardian, a leading newspaper in the United Kingdom, recently reported that in late 2011, half the people owning a mobile device in the UK now have a smartphone, and they projected that "it's very likely that in the next two years you'll see smartphones reach something like 90% penetration in the UK."
Even with record shipments of smartphones as well as tablets (such as the iPad), mobility is still in its infancy. According to the same Morgan Stanley research, out of 5.6 billion mobile subscribers, there are only 835 million smartphone subscribers, or just 15 percent penetration of smartphones.
Trend #2: Mobility becomes a two horse race between Android and iOS
On November 2, 2011, Research in Motion's market capitalization has dropped below its book value, in part reflecting that its market share in the U.S. has dropped from 24 percent to 9 percent in one year. Another major market share holder, Nokia (with its Symbian operating system) is transitioning away from Symbian to adopt Windows Mobile and has seen its market share drop during the transition. Today, Apple iOS and Google Android rule the roost, with Android now taking the lead in the smartphone market. With Apple's strength in mobile internet devices in the form of iPods and iPads, and with little credible competition in tablets, it is hard to envision Apple not maintaining a strong #2 position to Android.
Trend #3: Mobility has already dramatically changed a number of industries
Although we are in the early days of mobility, in 2011 we saw several major industries being reshaped because of mobility. We all know how the Internet impacted the newspaper industry more than a decade ago and how the iPod changed the music industry. In 2011 the rise of mobility caused a tipping point in industries such as book publishing, movies, and video games. Amazon reported in early 2011 that sales of digital e-books surpassed sales of physical, printed books. The Apple iTunes stores sell millions of movies online for viewing on iPads, significantly impacting sales of DVDs. Apple and Google are taking significant market share away from video game systems.
2012 Mobility Trend Predictions
Clearly, in 2012 mobility will continue its explosive growth, and as it further reaches critical mass, expect mobility to reshape new industries. I want to highlight three trends in particular that the explosive growth of mobility will cause, and that will reshape additional existing industries and significantly alter how companies interact with both customers and employees.
Prediction #1: Mobility will reshape the credit card and payment industry
Many readers may have first experienced mobile commerce when you walked into an Apple store, bought some Apple gear, and handed your credit card to an Apple store employee who in turn swiped your credit card in a device that was attached to an iPhone. You didn't have to move to a register to make your purchase.
With recently introduced technology such as Google Wallet, and mobile technology such as Near Field Communication ("NFC"), more consumers will be able to walk up to a check-out counter and simply pay with their smartphone. Retailers such as American Eagle, The Container Store, Foot Locker, Jamba Juice, Macy's, Office Max, and Toys R Us already have pilots of Google Wallet at select stores. Public transportation such as New Jersey Transit has been allowing travelers to pay for fares with NFC-enabled phones at select stations.
Besides the convenience aspect of using your phone vs. your credit card that is driving adoption of mobile payments, the integration of location-based services and online coupons (aka "Featured Offers") will also motivate users to begin to adopt this technology. At a mall and hungry? Tap a button on your smartphone screen and get offers from eating establishments right near you, and apply the coupon and the payment with a tap of your smartphone. Apple already has hundreds of millions of credit cards of consumers stored in their iTunes store and could look to leverage them, advancing mobile-based payments.
This means that businesses must adapt to how consumers now want to purchase goods, and corporate IT needs to help their business get ahead of this trend or potentially lose to competitors.
Prediction #2: Mobility will reshape the information security market
The information security market has historically been dominated by vendors of anti-virus software for Windows desktops (e.g. Symantec, McAfee), as well as makers of two-factor authentication solutions (e.g. EMC's RSA security division).
As users replace and/or supplement their desktops with iPads, iPhones, and Android devices, new attack vectors into the organization are being introduced. The classic model of applying anti-virus signatures no longer applies to mobile phones that may never be connected to the corporate network but are accessing sensitive corporate data. Security vendors must add mobile security to their lineup and factor in new attack vendors introduced by mobile Internet devices.
At the same time, this Near Field Communication technology that is being rolled into smartphones will allow the smartphones themselves to become smartcards. As Gartner notes, instead of building access cards, employees can use their smartphones to access work facilities. Similarly, don't be surprised to see online financial services offerings start seriously rolling out to consumers support for multi-factor authentication via smartphone to appease consumers who are concerned about identity thieves accessing their bank accounts online.
Prediction #3: Mobile advertising will explode
The introduction of location-based services combined with NFC and online offers is going to shift advertising dollars more to mobile devices. According to the aforementioned Morgan Stanley report, global mobile application and advertising revenue has increased from $.7 billion in 2008 to an estimated $12 billion in 2011 — a 17x increase in 3 years. Much like how internet in the form of Google Ads and Craigslist changed advertising and the classified ad business respectively, expect a "new channel" of promotion via mobile devices to start to rival ad revenues spent on television and the internet.
Again, this will cause businesses to rethink how they interact with actual and prospective customers, and corporate IT must seriously think about how they can build the infrastructure to support this new channel.
A Final Word
We live in exciting time as it relates to mobility, with "smart" devices now hitting critical mass, but a new wave of technology such as location-based services, NFC, and online offers will cause a new wave of innovation that will disrupt even more industries. Although it is still early, corporate IT needs to think seriously how they can ride these waves for both their customers and internal users and avoid being swept away by them.
Tom Kemp is the president and CEO of Centrify, an integrated software solutions provider that helps IT centrally control, secure and audit access to cross-platform systems and applications by leveraging Microsoft Active Directory.