Wednesday, April 09, 2008

Still on track for 5.5 million

My favorite pessimistic telecom commentator, Dean Bubley, has recently recapped his outlook on network evolution in his 500th blog post.

Given his general skepticism regarding UMA as a viable technology for dual-mode handset services, I suppose I’m honored that UMA was listed as the very first item he chose to list as ‘over-hyped’.

[Side note: considering UMAToday is the only site ‘hyping’ UMA, I hardly consider it ‘over’-hyped, certainly when compared with other things on the list like WiMAX. But I’ll take that as a compliment that we’re doing something right, thanks Dean.]

But given the comments, I think Dean's jumping the gun a bit:

UMA (unlicenced mobile access) - well, it still hasn't got much traction after another 30 months. Maybe 1.5m subscribers at Orange & T-Mobile US, plus some hopefulness around femtocells. My original forecasts (considered horribly pessimistic at the time) of 5.5m UMA homes at end-2009 now actually look insufficiently pessimistic after all.

First, the comment ‘after another 30 months’ seems a bit odd. Orange only launched 18 months ago (October 2006), and T-mobile just 9 months ago (June 2007). True, we’ve been talking about dual-mode services and UMA for some time, but there hasn’t even been one 30 month period, let alone ‘another’.

But second, I think the forecast Dean made relating to UMA-based dual-mode handsets might actually be one he gets right*. I happen to believe 5m units is within range for 2008. At the end of his prediction period (YE 09), I suspect there will be well over 10m units sold, easily meeting his prediction of 5.5m homes by YE 09.

Thanks for the vote of confidence Dean!

[* Dean is a big fan of the ‘naked SIP’ handset revolution, suggesting that this is the way, rather than UMA, that the market will embrace dual-mode services and VoIP.

In this model, subscribers buy/acquire a Nokia E or N series phone and download a third party SIP client onto the handset. The idea is to bypass those nasty mobile operators and make calls for ‘free’. It's the TruPhone model. Of course, there are several reasons why this won’t work:

  1. Spending $500 on a handset to make cheap calls doesn’t compute. Anyone shelling out $500 for a phone isn’t so concerned about saving pennies on phone calls that they’ll download a second client onto a phone.
  2. Putting a second client and a second phone number (the SIP service) on a handset is a hassle. Consumers and prosumers want a single number that’s available all the time, not just when the handset is connected to Wi-Fi.
  3. Oh, you want to run this SIP client over the 3G network as well as Wi-Fi? Round trip latencies for today’s 3G access network are 200 msec, and that’s just ‘your side’ of the call. It does not take into account the rest of distance those packets must travel. That’s an unacceptable delay for voice calls, even free.

For some reason, Dean’s prediction of 220m ‘naked SIP’ phones shipped in 2008 wasn’t captured in his list of ‘over-hyped’ technologies. I don’t honestly know how many ‘naked SIP’ phones shipped, let alone how many are actually use the application he describes. But I'm willing to guess it's a lot less than 22o million.]


Dean Bubley said...

Hi Steve

Thanks for the write-up. The reference to 30 months was in the context of the time since my blog post #1. The 500th post was reviewing what I'd originally suggested were over/under-hyped.

At the time (Oct 2005) UMA very much was overhyped, which is why I'd listed it first then, and it therefore made sense to review it first this time around. I'll certainly agree that today it's much less visible, and indeed that UMA Today is probably its loudest voice.

The SIP model is used by a mix of VoIP players (Truphone & co), operators (BT, Telecom Italia, DoCoMo et al) and enterprise FMC guys (Avaya, Divitas, Siemens etc), plus partnerships of these(Jajah / e-Mobile). Business models vary, some are "free", some paid.

Outside the US, dual-numbering is perceived as more desirable as it enables fixed & mobile numbers to be distinguished (each has different psychological perecptions to end users & usage cases vary)

For 2008, I'd say 200m+ phones with Naked SIP is reasonable. Maybe 100m or so non-FOMA Symbian phones, 20m+ Windows Mobile, a fair number of Linux devices, possibly 10's of millions of Java JSR-180 featurephones (notably SonyEricssons) although that particular API has had slower adoption than I'd expected when I did the report 2 years ago. I'm not sure if the new Nokia 6300i (which is based on the Series 40 featurephone platform & features a SIP VoIP client) has a fully or merely semi-naked SIP capability.

Certainly active usage is only a fraction of that, as it is with almost any feature on handsets except the camera.

Incidentally Steve - any idea what proportion of shipped UMA-capable phones are actually used with UMA services?



Steve said...


In response to your last comment about the number of handsets which result in service, I think I'll have to do a full post on the topic.

What we have heard from operators is that between 40-50% of handsets sold actually result in the purchase of a subscription.

This again is a staggering statistic. What other technology is subsidized in handsets that results in such a high ROI? Certainly camera's don't, nor music players.

Something to consider.