Smartphone and Portable (i.e. Laptops/Netbooks, cellular-enabled Tablets) devices continue to drive higher data usage and service providers (i.e. carriers) are starting to see a significant uptick in data traffic. Both MetroPCS and Leap Wireless’ Cricket Wireless have introduced new Smartphones over the past several quarters, and together with their data plan offerings, are seeing an increase in data traffic. In addition, Leap is in the process of launching its Muve Music product offering, which may further stretch its capacity. Strategies are in place to alleviate potential bottlenecks, but will that be enough over the next 18 to 24 months as ease of use, synchronizing PIM and content, apps, and file sharing (via upload/download to the Cloud) increase?
The COO of MetroPCS, Tom Keys, sees Smartphones as the handset of choice and no longer Feature phones (to quote: “Feature phones are dead”). MetroPCS’s “Wireless For All” plan which was launched beginning of 2010 has helped to increase their subscriber base from 6.63 million at the end of 2009 to 8.1 million subscribers at the end of 2010 – ~22% growth! This product offering includes all taxes and fees, which is a consumer-friendly plan – no hidden fees such as state telecom tax and franchise tax recovery – and is refreshing to see an all-in-one offering. This new plan has also significantly increased data traffic on their network
MetroPCS is also moving towards LTE (Long Term Evolution, 3GPP Release 8) data networks to provide increased bandwidth (and therefore capacity) to accommodate the data traffic demands created by Smartphone use. Present LTE downlink speeds are on the order of 5 – 12 Mbps (similar to WiMAX), which is great for Web-surfing (see my recent blog) – and larger file downloads.
Cricket Wireless will see more download data traffic as their Muve Music product is launched and new Smartphones become available that have their technology embedded. As for the success of Muve Music, it’s still to come. Cricket is seeing data usage growth (as all services providers have mentioned) and have a plan to address this issue over the short term – off-load to Sprint networks, provide session-based data, and eventually bring on LTE. But as noted in a recent article from Fierce Wireless, Cricket plans to throttle-back the available bandwidth for users that exceed their allotted data plan…this isn’t a strategy to “keep customers” since it can diminish the user experience. Charging extra – moving the user up to the next data plan for $10 extra that month – is a preferred strategy however.
Tablet’s are becoming all-the-craze and will drive data traffic, albeit not as great as Smartphones, Laptops and Netbooks (see Figure 1, below). Apple's iPad has generated much interest in Tablet computing with estimated shipments in Q4/2010 of ~7.3M units, ~75% market share. Android-based Tablets market share is gaining relative to the iPad, however, and has shipped nearly 2.1M units in Q4/2010, ~22% market share. Other operating system rivals will come on the scene - Blackberry and Windows 7, for example – but actual market share growth is undeterminable. What is expected, though, that features, functionality and apps will continue to drive data traffic.
As Smartphones and Portables become pervasive and consumers utilize them to a greater extent, LTE-Advanced (and possibly WiMAX 2 – WirelessMAN-Advanced) under IMT-Advanced will become a requirement to keep consumer’s performance expectations satisfied while mitigating data traffic bottlenecks. In a recent vote at the 3GPP conference in Taipei, the final specification for release 10 will be frozen soon, in March 2011. Given the newer Mobile and Portable devices with newer technologies coming to the market over the next few years, I would target late 2013 (early 2014) time frame to rollout the “IMT-Advanced” technology due to data traffic demands.
Cisco’s VNI (Visual Network Index) for global mobile data traffic shows a CAGR (Compound Annual Growth Rate) of ~92% from years 2010 thru 2015. The global mobile data traffic will grow from ~0.24 EBytes (exa-bytes) in 2010 to ~6.3 EBytes in 2015 – approximately 26X data traffic increase, with Smartphones exhibiting a significant growth rate and having almost half the data traffic demand of Laptops/Netbooks. According to Cisco’s white paper, there will be 788 million mobile-only Internet users by 2015 – the mobile-only Internet population will grow 56X from 14 million at the end of 2010 to 788 million by the end of 2015 – considerably increasing data traffic.
Figure 1 - Global Mobile Data Traffic 2010-2015
Source: Cisco VNI
To help alleviate the increasing data traffic demand, other major carriers – Verizon, T-Mobile USA, AT&T and Sprint – have either launched their LTE network or announced other strategies. Verizon launched LTE in 38 cities and covering 110 POPs in December 2010. T-Mobile USA has ruled out deploying LTE technology because they’re waiting for available mobile/portable devices to drive demand, yet T-Mobile USA is considering partnership deals to cover the basis.
This may be T-Mobiles USA’s opportunity to “wait-and-see” and then deploy LTE-Advanced before their competition, thus delaying the investment and additional costs of deploying LTE and then upgrading a few year later. This strategy may work out for the T-Mobile USA since they’re continuing with deploying HSPA(+), which will offer significant bandwidth improvements over the present UMTS/HSPA technology. AT&T doesn’t have near-term plans either to launch LTE, but has put a stake in the ground for VoLTE (voice over LTE) support in 2013. Sprint is offering WiMAX but hasn’t rules out LTE in the future given geographic availability and demand. Both T-Mobile USA and AT&T will continue to utilize HSPA technology evolution to satisfy the data traffic demands for the next few years.
Perspective
As Smartphone, Laptop/Netbook and Tablet technologies and their uses advance over the next several years, accommodating the resulting data traffic demand by the present networks will be complicated. Faster, .i.e. higher bandwidth, data network technologies will become available, yet the consumer will find ways to consume bandwidth as handset applications, real-time communications, Cloud-based storage, and PIM and content synchronization expand.
Cisco mentions in their latest Global Mobile Data Traffic 2010-2015 overview, that offloading data traffic to lessen congestion is a necessary consideration. “By 2015, over 800 million terabytes of mobile data traffic will be offloaded to the fixed network by means of dual-mode devices and femtocells. Without dual-mode and femtocell offload of Smartphone and Tablet traffic, total mobile data traffic would reach 7.1 exabytes per month in 2015, growing at a CAGR of 95 percent,” according to Cisco. Essentially, backhaul will be an issue and fixed/wired line networks to offload will reduce the mobile data traffic congestion by ~11% (e.g. 7.1 EBytes/month without offloading versus 6.3 EBytes/month with offloading).
The connectivity to access the fixed/wired line network for offloading may be through Wi-Fi (or other wireless broadband) technology. I’ve also suggested in a prior blog that handset providers combine LTE-Advanced/WiMAX 2 and utilize each technology as needed – one for data communication and the other for backhaul – as sort of a mobile femtocell. In addition, microcells, picocells and femtocells will become more widely deployed in the future for off-loading the network’s data traffic in either high-use areas or in-door, as well as for backhaul.
Service providers’ network strategy becomes all the time more important over the next several years to provide enough capacity to meet demand, while minimizing their investment (i.e. capital cost) as the data network technology landscape continues to change. Verizon has moved to LTE to provide additional capacity, but few phones offer LTE technology (…more phones to come in 2011). Since most cellphone owners have two (2) year contracts, a purchase of a LTE-based Smartphone now (or in the next 12 to 18 months) means that when their contract expires they can purchase new phone (with LTE-Advanced ?), which will be in 2013 to mid-2014 range, just in time for the launch of LTE-Advanced (and/or WirelessMAN-Advanced, i..e. WiMAX 2).
AT&T and T-Mobile are continuing to offer an incremental versions of the HSPA technology – HSPA(+) release 7/8/9 – which offers “increasing” speeds that are similar to LTE (the present technology, not the Advanced version which is release 10). This strategy will keep cap-ex cost lower while providing bandwidth improvements…at least for a while. Other 2nd and 3rd tier service providers will partner with the major carriers to offer higher data rate speeds to their customers.
The next three (3) to five (5) years will be exciting as newer Mobile and Portable devices with greater features and functionality drive increases in data traffic. Furthermore, each carriers’ strategy to upgrade quickly to higher bandwidth data networks or combine technologies to accommodate data traffic increases, will become increasingly important as “bottleneck relief” and capital expenditures will need to be balanced. The end game is to provide an affordable data network that intern offers an extraordinary user experience as new devices and uses become available to the consumer.
Smartphone download and upload speeds are becoming more important as Internet gaming, graphic rich apps, and multitasking are further enabled by improvements in Smartphone technology. The latest Smartphones have both 3G (and/or 4G) cellular and Wi-Fi technologies, but the rated speed of the cellular (or even Wi-Fi) technology doesn’t necessarily indicate that your handset will perform as expected – download and render a website to its screen similar to a laptop – which is the ultimate handset user experience. This performance requirement goes beyond just rendering a website, it bleeds over into time critical applications such as online gaming.
Several factors influence the Smartphone’s download (DL) and upload (UL) speeds as well as its rendering to the screen:
1) cellular technology (3G or 4G)
2) available bandwidth
3) website complexity and size
4) traffic to that website and its server’s ability to deliver content
5) the internal hardware capability
The entire link between Cloud-based content and a Smartphone’s display is primarily influenced by the above five (5) factors and affects Web-surfing as well as online gaming. Performance expectations along with novel uses of the Smartphone are continuing to grow as new phones are released. In addition, Smartphone capabilities have improved at an increased rate this past year (2010), as seen by releases and announcements of 4G (WiMAX and LTE) technologies, A9 dual-core processors, video encoder/decoder that supports 30fps video playback, etc. What other applications can a Smartphone be used for other than to communicate directly with the Cloud for Web-surfing and online gaming?
Although not a new idea, the Smartphone can be used as a Mobile Hot Spot, thereby allowing a person with a laptop to Web-surf remotely – an indirect use for Web-surfing. Yet to make this a desirable user experience the Mobile Hot Spot should perform similar to a Wi-Fi connection at home or the local café; a performance short-fall, until recent Smartphone entrants. Whether a website is rendered to the Smartphone’s display, or to a Laptop’s display when used as a Mobile Hot Spot, the entire system from website to the device’s screen makes an impact on the performance and the user experience.
“Mobile Hot Spot” Performance Testing
Most Smartphone’s offering the Mobile Hot Spot feature can connect up to five (5) laptops or any portable device that has Wi-Fi technology. Laptop Mag (laptopmag.com) conducted a series of tests using some of the latest Smartphones that are Mobile Hot Spot enabled. The Mobile Hot Spot feature uses the phone’s cellular (data) network to connect to the Cloud, while using its Wi-Fi to connect to a laptop’s Wi-Fi, acting as a bridge or “pipe” for the laptop, see Figure 1.
Source: Imagines taken from Internet
Figure 1 – Smartphone used as “Mobile Hot Spot”
The test by Laptop Mag to determine the Best Mobile Hotspot Smart Phone took place this past September (i.e. Sept 2010). The results are summarized in a matrix in Figure 2 of download (DL) and upload (UL) speeds and Web-surfing times, in seconds. The testing used a Toshiba Satellite A665 notebook as the Wi-Fi connected test device, several Smartphones acting as the Mobile Hot Spot, and SpeedTest app on the notebook to test the DL/UL connection speeds through each Smarpthone. For the 3G/4G Smartphones data matrix in Figure 2, the number on the left side in the cell is the 3G time (in seconds), and the right side is the 4G time (in seconds). The DL/UL speeds for the HTC Droid, HTC Evo 4G and Samsung Epic 4G are comparable to speeds achieved with “average” home connected cable technology available today.
Figure 2 – Results of Laptop Mag’s Download and Upload Testing, Mobile Hot Spot
The testing was conducted in New York City but used only Verizon and Sprint networks because these carriers only had phones with Mobile Hot Spot functionality. AT&T and T-Mobile will soon offer phones with Mobile Hot Spot functionality, however.
An overview of the testing is available on the Laptop Mag’s blog. The data in Figure 2 shows that the DL/UL speeds and rendering times to the Laptop’s screen produce a desirable Web-surfing user experience, but the blog write-up doesn’t describe the details that can affect the DL/UL speeds; for example, the amount of activity on the website during the time of testing, which can slow a server’s response; or multiple Laptops using a single Smartphone that divide up the available bandwidth, reducing the DL speed and increasing the time to download. Also, the size (in kilo-bytes) and complexity (e.g. flash) of the website can affect the download response.
All these websites have different sizes and complexities that change throughout the day, week, etc. For instance, the download time of the Laptop Mag’s website versus NY Times’ website (see Figure 2) suggests that Laptop Mag’s website has twice the amount of content to download, which may not be the case. However, Laptop Mag’s article does describe and examine the innovative use of the Smartphone as a “pipe” to link a Laptop to the Cloud using cellular + Wi-Fi technologies, i.e. turning the Smartphone into a Mobile Hot Spot. I recently took Laptop Mag’s testing to the next level to better understand and pinpoint the potential bottlenecks of the Smartphone and Cloud link that slow the rendering of a website on the handset’s screen – is it the cellular (data) network or the handset’s internal hardware?
Additional Data Gathered
Since Laptop Mag already provided data using the Smartphone as the connectivity pipe, I wanted to first test the Web-surfing experience without the Smartphone – using a (Ethernet) connected Desktop/PC and a Wi-Fi connected Laptop, to a modem connected via cable to the Internet. Second, I tested a (standalone) Smartphone’s cellular (data) connection and then its Wi-Fi connection (in separate tests). This additional data helped to understand and differentiate the user experience between downloading and Web-surfing through the Smartphone (using it as a Mobile Hot Spot) and downloading and Web-surfing to the Smartphone (using Wi-Fi, 3G and 4G technologies).
In addition to using Speedtest.net’s software tool, which provided DL/UL speeds and ping times, I used Pingdom.com’s software tool to gain further information about the website, such as the size of each website and the download time for each object (e.g. images, CSS, JavaScripts, RSS, Flash and frames/iframes) within the website. The test results are shown in Figure 3.
Figure 3 – DL/UL Test Results for Desktop/PC and Laptop,non-Mobile Hot Spot
Note:
1 - Used tool from Pingdom.com. Sends out ping packets and provides network response times
a. Times of less than 50 milli-secs are considered “fast” response times
2 - Rendered full website on screen
3 - Connected to server in Palo Alto, CA
4 - Connected to server in Wichita, KS
Several tests were taken for each case and the average provided, with the Samsung Intrepid in 3G (CDMA) mode having a much greater variation in DL/UL speeds, see Figure 3. Also, the number reported within the matrix cell on the left side is the Pingdom.com test time, and the number on the right side in the same cell is the download and rendering test time, both in seconds. For example, for the Desktop/PC test case and for the espn.go.com website, which was 1,025k bytes and 31 objects, it downloaded in 2.9 seconds using the Pingdom.com tool, and downloaded and rendered (in real-time) on the Desktop/PC screen in 4.2 seconds. In comparison, the Samsung Intrepid/Wi-Fi test case downloaded espn.go.com in 4.3. seconds using the Pingdom.com tool, and downloaded and rendered (in real-time) on the handset’s screen in 45 seconds – a bottleneck?
A noteworthy outcome of the testing was the rendering of the website to the Samsung Intrepid’s screen in both 3G (CDMA) and Wi-Fi modes, which took a long time (in comparison) and translated to a poor user experience. Although the varying bandwidth in 3G (CDMA) mode could be the part of the cause for the slower download speed, rendering to the screen is significantly affected by the handset’s internal hardware design and this affects performance as well. The download and rendering times for the Samsung Intrepid using either the 3G (CDMA) or Wi-Fi connection were almost the same (~45 seconds), which points to the internal hardware design as the bottleneck. This is most apparent when compared to other (newer) Smartphone’s in Figure 2, which rendered the website to the Laptop’s screen quickly (in less than ~10 seconds) using either 3G (CDMA) or 4G (WiMAX) technologies.
To further understand and compare the performance of the new 3G and 4G phones with the Samsung Intrepid data, I then tested the HTC Evo 4G phone in both 4G (WiMAX) and Wi-Fi modes (same phone tested in Laptop Mag’s testing), and tested the HTC Hero phone in both 3G (CDMA) and Wi-Fi modes. The results of the data gathered are shown in Figure 4.
Figure 4 – HTC Evo 4G in 4G/Wi-Fi modes and HTC Hero in 3G/Wi-Fi modes, to handset
Note:
1 - Used tool from Pingdom.com. Sends out ping packets and provides network response times
a. Times of less than 50 milli-secs are “fast” response times
2 - Connected to server in Palo Alto, CA
3 - Connected to server in Los Angeles, CA
4 - Mobile website version was downloaded
The numbers in Figure 4 included downloading each website to the Smartphone and rendering it to its screen. The Pingdom.com tool was not used for supplementary testing since it became apparent in the previous testing results (in Figure 3) that this tool provides information about the website’s objects and download time only to the Smartphone, and was consistently faster than downloading and rendering to the Smartphone’s screen. The testing results in Figures 2 thru 4 provided additional insight into various connectivity uses of the Smartphone and its performance regarding Web-surfing. The connectivity uses can be summarized into three basic categories:
A.Smartphone using its “Mobile Hot Spot” functionality – Wi-Fi + 3G/4G
B.Smartphone using its Wi-Fi technology
C.Smartphone using its cellular (3G/4G) technologies
The data in Figure 4 clearly shows the 4G (WiMAX) network downlink performance (at 9.5 Mbits/secs) surpasses the 3G (CDMA) network (at ~0.4 to ~0.9 Mbits/secs) and Wi-Fi connection (at ~3.8 Mbits/secs). The ping test varied between technologies and the ping performance provided better results when the Smartphones were connected via Wi-Fi to the network, at ~117 milli-seconds. The faster the ping response, the better the network response is for time critical applications. The ping tests for Smartphone-Wi-Fi and cellular cases, however, were not as fast as the Desktop/PC-Ethernet and Laptop-Wi-Fi tests, which were on the order of ~30 milli-seconds (see Figure 3).
The Web browsers for the newer Smartphones detected espn.go.com and nytimes.com websites’ mobile versions, and these mobile versions reduced the download times significantly, as seen in Figure 4. In fact, from the testing I was able to conclude that the 3G (CDMA) network with a sustained minimum downlink of ~0.7 Mbits/sec (and an uplink of 0.15 Mbits/sec), would have just enough bandwidth to download the larger and more complex websites, while providing a good user experience. The only anomaly I came across was the downloading and rendering of the Laptop Mag website (which didn’t have a mobile version), and that took ~37 seconds using the 3G (CDMA) network This longer time (i.e. slower download speed) may have been caused by a slow 3G downlink speed at the time of testing, which I found varied often during testing.
With data in hand and looking back at the five (5) criteria that can influence Web-surfing using a Smartphone, the DL/UL speeds and rendering of the website to a Smartphone’s screen is well understood. The difference in cellular (data) technology, 3G vs. 4G, can make a performance impact, especially since the 3G technology’s bandwidth varied considerably throughout the testing, bandwidth limiting the connection and affecting the download times; however, the 3G download speeds in Laptop Mag’s testing are several hundred to a mega-byte higher than my testing, which makes a difference regarding the time to download and render content to the Laptop’s screen. Yet it was determined that a certain sustained minimum bandwidth on a 3G network could still produce a good user experience for Web-surfing on the Smartphone. In addition, mobile versions of the websites enabled faster download times for the newer Smartphones, thus providing a very good 3G (CDMA) experience.
Traffic to the website and the website’s server ability to deliver content wasn’t directly tested but the websites were tested during the day, evening and weekend, and found little difference in performance (when 3G bandwidth limiting wasn’t an issue!). The performance of the newer Smartphone’s compared more closely to a wired Desktop or Wi-Fi connected Laptop, thus “a sign” of closing the performance gap between portable and mobile devices.
The quick display (i.e. render) of content on the Smartphone’s screen is a salient feature that users are becoming accustomed to with improvements in technology. There are fundamental (wired vs. wireless) network limitations as noted in the testing, but the quick rendering of text and media (for Web-surfing and online gaming) is necessary for all new Smartphones released in the future, thus continuing to “raise the bar”. Besides the cellular (data) network limitation, it was determined that the bottleneck which limits the rate of rendering is affected by the Smartphone’s internal hardware design.
A Look At The Internal Hardware Design
The movement of data (in bits or bytes) from its wireless connection through the phone’s connected hardware and to the display depends on the hardware, inter-connectivity, and related software/firmware. See Figure 5 for a general diagram of a Smartphone’s internal hardware connectivity.
Source: Imagines taken from Internet
Figure 5 – Exploded View: General Internal Hardware Connectivity of a Smartphone
There are a number of factors as mentioned within the Smartphone’s design that affects the final display (or rendering) as the bits move from the cellular or Wi-Fi hardware to the screen. The following matrix, see Figure 6, shows the application processors and GPUs for each of the Smartphones used in the Laptop Mag’s and my testings.
Figure 6 – Matrix of Smartphones, the OS, and Apps Processors and GPUs
The high-end Smartphones that contain the latest application processors and GPUs will provide a better Web-surfing experience, as noted in the testing results. Qualcomm’s Scorpion and Snapdragon platforms, as well as Samsung’s Hummingbird and TI’s OMAP platforms, are in the Smartphones tested. These platforms not only improve the rendering time of a webpage, but enable better gaming experience and high-definition (HD) video decode and playback. A comparison of these three processors is available at PhoneArena.com. Other competitors offering high-performance application processor and/or GPU products include: Nvidia’s Tegra/2 platforms, Freescale’s i.MX multimedia applications processors and ST-Ericsson’s NovaThor platform.
Qualcomm’s GPU – Adreno platform – can process 32M triangles/sec (Adreno205) and 22M triangles/secs (Adreno200), enabling quick processing of rich graphic content. “Triangles per second” is one measure of a GPUs graphic computing power. The PowerVR used in the other Smarphones tested doesn’t have the same “triangle” computation spec/capabilities as the Adreno, but visually (i.e. empirically) produced similar rendering results. From my testing, the HTC Evo 4G had superior Web-surfing performance versus the competition. However, an article by Digital Trends mentions that the Samsung Epic 4G produced better graphics performance for gaming tests (Epic 4G: 55.1 fps, frames per second vs. Evo 4G: 42.9 fps) and Neocore benchmarking than the HTC Evo 4G, yet the sum total of all areas tested gave the HTC Evo 4G the “win”.
As determined through testing, both the cellular (data) connection speed and application processor/GPU performance contributed to bottlenecks that limited the content rendering to the handset’s screen. Gray areas exist with even the newer Smartphones that prevent a consistent high-level user experience for Web-surfing. These gray areas include: varying 3G cellular connectivity speed and the application processor design (which includes the GPU). Further improvements in the application processor and GPU performance will bring near-Laptop performance levels to newer Smartphones in the future. Newer 3G technologies, such as HSPA or HSPA+ will reduce the probability that your cellular (data) connection will throttle-back to an undesirable level, as can happen in densely populated or high-use areas.
Minimum sustained speeds could be imposed by the carriers but that may also block other users from data network access, creating an even worse experience – no network access – or “minutes” to download a complex website. Higher data rate cellular technologies, i.e. 4G – WiMAX and LTE, that are becoming available in the newer Smartphones will “open the pipe” to further accommodate data network traffic. Motorola’s announcement at CES 2011 of their Atrix 4G Smartphone is a performance monster. Due to be released in March 2011, it uses an Nvidia Tegra 2 dual core processor (Dual-Core 1GHz Cortex A9 + GeForce ULP), cellular technology – HSDPA (category 10 @ 14.4 Mbps), and has Wi-Fi (802.11 a/b/g/n – 2.4 and 5 GHz band technologies), amongst other technology upgrades relative to the devices tested in this article. HSDPA category 10 isn’t considered 4G technology but offers significantly more bandwidth (and nearly 4G speeds). The additional cellular data speed and the Nvidia Tegra 2 processor will make for a superior Web-surfing experience as well as online gaming experience using the Atrix 4G.
Perspective
As mobile users continue to utilize their Smartphones for Cloud connectivity, the demand for improved Web-surfing will grow. Most websites in the Cloud have sizes that range from 40 kbytes to 1,500 kbytes in size and contain 6 to 140 objects. Larger websites can be demanding for Smartphones, thus providing an average user experience, where as a wired or wireless Laptop performance sets the benchmark for Smartphones to achieve.
Mobile website versions do make the Web-surfing experience “better” for a Smarpthone, especially when data network speed limitations come into play. Once the data network limitations are minimized, then the Smartphones’ internal hardware design becomes the potential bottleneck to render the full website on the display in a time that meets the user’s expectation.
From the testing conducted, Desktop/PC-wired and Laptop-wireless downloaded and rendered websites in less than 7 seconds, thus establishing a target for Smartphones to achieve. Most websites were rendered within 10 seconds on the newer Smartphones. My testing of the Samsung Evo 4G in WiMAX (4G mode) took about 15 seconds to render with no network limitations (where as Laptop Mag showed less than 5 seconds to render on the Laptop’s screen).
My user experience was still very good since I could scroll around on the screen with my finger to view content as it downloaded. My experience with the HTC Hero was good, but Laptop Mag’s website took about 37 seconds to fully download; however, I could still scroll around the screen with my finger to view the content as it downloaded. The Samsung Intrepid was an agonizing experience and lacked flexibility to maneuver on the screen to view content.
The up-and-coming Smartphones – such as the Motorola Atrix 4G and others to follow in 2011 – will have the higher performance, and there is much anticipation to see if they provide a wired-like experience that accommodates the demands by the gaming enthusiast and multi-taskers, prosumers, and Gen-X and Gen-Yers.
Smartphone or Tablet, together with compelling features (e.g. Mobile Hot Spot functionality) and offered at an array of prices, does make a consumer wonder what Cloud-accessible devices will the industry start to consolidate towards in the near future. And does the consumer want to always wait two (2) years before they buy a new Smartphone or will the carriers consider new contracts to allow yearly upgrades by the consumer so they can take advantage of the newer technology, sooner?
I own a Desktop, Laptop and two Smartphones – but I would probably reduce this to just two devices if the user experience for 1) performance was high, 2) roaming was seamless and with low/no roaming charges, and 3) cross-device synchronization of content and PIM (personal information management) was easy and effortless. Let’s see what the next eighteen (18) months brings.
Dan Butcher from Mobile Commerce Daily just published a very good article on contactless mobile payments, click here. He briefly discusses the ISIS initiative as well as Europe’s launch this summer with a partnership between Orange, Everything Everywhere, Barclaycard, MasterCard and Gemalto.
Take-aways from the article include:
•The launch proposition will focus on an industry-backed, SIM-based approach to payments with the goal of enhancing security for customers.
•Gemalto will take on the TSM (Trusted Service Management) operated services role, offer NFC SIM cards with a payment application, and provide a user interface on the handset.
•NFC applications role out in the UK are structured around the following use cases: NFC payment and transport, loyalty and couponing programs.
At the end of the article there is a video to view on mobile financial services offering by Gemalto.
The credit card companies – MasterCard, Visa, and Europay (originally know as: EMV) as well as American Express and Diners Club – and their early involvement with smart cards to create its specification, have helped to guide the way for contactless payments. EMVCo was established to oversee long-term maintenance and compatible of the system. With the exception of countries such as the United States, EMV-compliant cards and equipment are global. Today, a country's national payment association, in coordination with MasterCard, Visa, American Express and JCB (formerly Japan Credit Bureau), jointly plan and implement EMV systems.
Contactless payment terminals are increasingly available at merchant locations (e.g. McDonald’s, company cafeterias), transit ticketing (e.g. train and bus terminals) and unattended locations (e.g. vending machines). Payment terminal manufacturers are seeing an increase in the rate of contactless terminal sales (e.g. high-end terminals that have displays with in-store personalized mobile marketing capabilities), while credit card companies are seeing an increase in use of contactless cards and alternative devices (e.g. key fobs).
Carriers who have rolled out mobile contactless proximity payment trials to date have clearly benefited from the ability to leverage the contactless infrastructure that already exists in many regions of the world, due to the success of contactless payment deployments which utilized a variety of form factors, including cards and attachable /programmable stickers.
Handset manufacturers are beginning to recognize the value proposition of NFC-enabled phones and are introducing many Smartphones with NFC beginning in 2011. The ISIS JV (a trademark of JVL Ventures, LLC) has been formed to deliver/launch a mobile payment system in North America into key geographic markets over the next 15 to 18 months. Europe and other regions (globally) have rolled out their mobile payments system and are beginning to upgrade (e.g. Japan), or are completing trials and will offer mobile payments soon.
In addition to the confluence of available/usable contactless payment technologies and stakeholders collaborating with a common interest both with trials and actual deployments, the various factors driving the business case to include NFC technology in mobile devices can be summarized:
•The ubiquity of the mobile phone, and more specifically, the Smartphone
•The capacity for extended functionality of the handset now that more Smartphones are in the hands of consumers and prosumers
•The continued increase in the number of contactless cards and contactless payment terminals
•The continued increase in the use of mobile phones for transactions, e.g. SMS
•Carriers, banks, credit card processing companies and handset manufacturers in North America have realized that now is the time to combine forces and drive the ecosystem for mobile payments
•Additional revenue can be gained through OTA provisioning and eWallet advertising
For the consumer and prosumer, mobile payments have a compelling value proposition – secure payments, flexibility and convenience. However, “mobile payments” isn’t for everybody and consumers that find “change” difficult, will less likely integrate this technology into their lives.
Purchasers of goods and services that have a Smartphone (or other advanced mobile technology), would be more inclined to utilize this payment vehicle since these Smartphone owners usually are Innovators, Early Adopters and Early Majority (as described by marketing terminology). The product diffusion curve in Figure 9 depicts the penetration of a product as a percentage of people. People are defined as: those who own and use (even if it’s only on occasion) a “cell phone”; and Smartphone is a category within cell phones.
As time advances so does the penetration of a (new) product or technology as more people use it. The curve can be used as an illustration for personality types that would have a greater (and lesser) tendency to use (i.e. buy and implement in their life style) the product: greater tendency – Innovators, and lesser tendency – Laggards.
Moreover, not all Innovators who embrace a new product, e.g. a Smartphone, would be equally as quick to embrace a new technology subset of that product, e.g. mobile payments using NFC technology. In other words, a portion of Early Adopters may be Innovators or Early Majority when it comes to actually using their Smartphone’s NFC technology for mobile payments; which is example of NFC utilization and enablement (as earlier described) as a percentage of subscribers.
There are a myriad of papers written on the psychology of habit adoption, but a study conducted by the Boston Federal Reserve in 2007 on Consumer Behavior and Payment Choice may provide some insight into barriers as well as decisions behind adoption. This study used employees of the Fed, so the results in terms of percentages may be more conservative in comparison to the general population. However, the reasons and thoughts behind the choices for using cash, checks, debit or credit cards to paid bills or buy goods does have validity. A couple of interesting facts include:
•Cost, convenience, and timing are the three most important fundamental characteristics that determine consumers’ adoption and use of a payment method
•Safety and privacy also are important as they relate to susceptibility / consequences of identity theft
•Payment method; as most consumers use a variety of payment methods each month for each type of bill
•Payment choice is a joint decision (between couples)
When consumers switched from checks to other payment methods, the method they chose depended on the location and amount of the payment, among other things.
1.For payment amounts below $20 (also called micro payments), 51% used cash
2.For medium-sized payments ($20–50), 46% used debit cards
3.For large payments (amounts above $50), 48% used credit cards
The study further discusses as to why respondents change payment methods:
•About 37% of respondents reported that convenience and various elements of cost were the primary influences on their decisions to substitute electronic payments for check
•18% of responses stated that cost (i.e. saving money on checks) was a factor
•13% of responses indicated that better recordkeeping was a factor in respondents’ switching (from checks to debit cards)
•Almost one-third (~33%) of responses indicated that use of debit cards increased because more stores accepted them than previously
This last sentence can also describe why and how barriers could have been lowered earlier – by implementing electronic payment terminals at the retail stores. More specifically, if merchants installed only NFC-enabled terminals with mag-stripe capabilities and credit card companies issued more contactless credit/debit cards, then this push mechanism could drive consumers to transition their payment habits more quickly, thus penetrating the product diffusion curve faster. (Personally, I don’t recall ever being asked by my credit card companies if I wanted a contactless-enabled credit or debit card.) Once NFC-enabled phones become readily-available, consumers will have other payment options then to use a contactless terminal for a transaction.
Two NFC-enabled phones using the peer-to-peer mode – one in Active (or Reader) mode and the other in Passive (or Tag) mode – can transact with each other without the need for a contactless terminal as the point of interaction (POI). This can open the market for new types of transacting that bypass the present contactless terminal system. Virtual and mobile merchants, for example, would be able to offer discounts, their own loyalty cards and accept payments – phone to phone – using the OTA provisioning to finalize the transaction.
In addition, a user could pay their bills from their eWallet, transfer funds from saving to checking, transfer balances from credit card to credit card, and transfer funds to a relative across the country – rather than using Western Union! The one-to-one transaction feature could further motivate the phone owner to start using mobile payments as a vehicle for making financial transactions. Whether the transaction is made peer-to-peer or through a contactless terminal, it’s safe and secure. Mobile payments security, and the capability of preventing someone from hacking or accessing your eWallet information, is greater than with a credit card or check book.
OTA “remote access” software used by companies on employee’s laptops to access it and lock out a third-party from retrieving the files is similar in capability as the software used on a company-issued mobile phone. This security software capability is presently available and is used to secure the eWallet, creating several barriers to access.
If your mobile phone is lost or stolen, a PIN number (i.e. barrier #1) prevents a third-party from accessing your eWallet. “Three tries and you’re out” feature (barrier #2) could also be included as a means to lock down the eWallet when the PIN is incorrectly entered. As biometrics becomes more available and reliable, a fingerprint scan, iris scan or retinal scan (barrier #3) can be also used to prevent unwanted access to your eWallet. Further, OTA provisioning will give the mobile phone owner the ability to send an SMS or go online and enter a “remote swipe” code (barrier #4). This code can be sent to the handset via the cellular network and/or Internet (accessible via Wi-Fi), so when the mobile phone is “on” all eWallet data will be automatically deleted or “cleaned” from it. Whether the phone is “on” or “off”, however, and the battery or SIM is attempted to be removed, a “local swipe” to the eWallet can be automatically executed (barrier #5), thwarting the intruder.
Since all information is backed up automatically to an off-phone or cloud-based storage, when you buy a new mobile phone or find the old one, the eWallet information can be re-downloaded to the phone through OTA provisioning. With all Smartphones having built-in GPS, apps exist (see AptoLink) that can run in the background and can track (and upload) its location so a lost or stolen phone can be quickly traced. This functionality may be the first line of defense, since many phones are merely “temporarily lost” or misplaced. GPS can be used for more than just tracking a phone’s location.
GPS will become more valuable, however, as a tool for location-based services (LBS), primarily advertising to the handset with information that is geo-based and habit-based. With the understanding of a person’s buying habits that are based on location/day/time-of-day, over time an efficient notification, advertising and coupon offering can be provided without spamming. This functionality is a complement to mobile payments – by assisting a phone owner to make a purchase based on location and habit, then using your handset to complete the financial transaction, wirelessly.
NFC mobile payment technology is safe and secure for consumers to use whether it’s finding the phone’s location (lost or stolen), having remote access to delete all eWallet data, or efficient advertising based on location/habit-based activities. Some additional thoughts on moving the consumer towards adopting NFC technology include:
1.Make the process simple, secure and effortless
2.Do the work for the handset owner – don’t ask the handset owner to fill out streams of paper work and re-enter all credit, debit and loyalty card information
3.Prefill-out the phone owner’s confidential information and have them OK a simple and concise “list” online
4.Securely provision their information in a way that the phone owner only has to accept each digital application (with the prefilled-out information) on their eWallet
5.Simple editing should be available on the eWallet if previously reviewed information online isn’t fully accurate or needs to be updated on-the-fly
NFC-enabled mobile payment has the financial infrastructure in place. Stakeholders have conducted trials globally for a number of years and are now moving forward and pulling together complementary partnerships. Japan is a testimony of a country already using mobile payments, a model to learn from. As more consumers and prosumers become aware of (and use) mobile payment technology, it will also profoundly affect and revolutionize the financial transactions industry.
I have over 18 years of mobile and RF/wireless marketing, management and product development experience in systems, apps and consumer electronics products. I follow technological convergence, market trends and ecosystems, and write about them. My work experience has been with wireless and mobile start-ups as well as several Fortune 500 companies in the semiconductor and consumer electronics markets - Palm Smartphone Marketing, SanDisk A/V BL, and Philips Semiconductors (now NXP).
