inCode predicts wireless inflection point in 2010

6. Carriers snatch up M2M vendors 
Acquisitions in the machine-to-machine (M2M) space were already beginning in 2008, but interest in connecting a slew of devices to the wireless LAN peaked in 2009, especially amongst carriers. AT&T and Jasper Wireless teamed up to launch a new management platform for consumer and business devices. Verizon Wireless and Qualcomm formed a joint M2M venture, nPhase. Fuenzalida said the interest has been driven by the profit-boosting ability of this low-churn, low-cost-per-gross-ad business. inCode believes at least one operator will make a significant acquisition of a major M2M player to ensure it has the support and management requirements needed for M2M enterprise solutions.

“It could be any of the carriers; they are all looking at it – AT&T, Verizon, Sprint, T-Mobile, even Clearwire is looking at embedded-type models as well,” Fuenzalida said. “The idea is to offer a broader set of capabilities to either enterprises or end customers to be able to launch M2M, so it’s more of as an enabling technology.”

7. Operators take a backseat to IT in the cloud
Cloud computing is becoming a hot topic in app delivery as a way to increase customer stickiness and remove the network burden. A battle between capabilities in the cloud versus the edge is beginning to brew as telcos fight to the role from giants like Google and Amazon. These operators will have challenges around response time, coverage, network security and vulnerability issues to give consumers reason for pause. Next year, the two sides will collide, but no clear winners will emerge, inCode said. “It will be tough for carriers to win offering a bunch of cloud storage and applications you’ll keep forever,” Fuenzalida said.

7. Mobile operating systems will winnow away
With seven dominant mobile operating systems embedded in handsets today, a shakeout has to occur, Fuenzalida said. There isn’t enough device revenue to support them all and, even with open initiatives making it easier, developing for all seven takes time, investment, effort and pain, he said. OS platforms with extensive developer support, streamlined certification processes and integration of Web 2.0 features will take the lead. Specifically, Fuenzalida said the likely winners will be Android, BlackBerry, Microsoft and Symbian, as well as outsider Apple. Others will end up consolidating or dying off.

9. MVNOs are reincarnated as M2M providers
Mobile virtual network operators (MVNOs) haven’t had much luck in North America – either being run out of business or acquired by the operators that actually controlled the network supply. These old MVNOs were branding companies like ESPN and Disney, niche market providers like Helio andMovida or telecom bundler MVNOs like Embarq and Qwest, Fuenzalida said. The bundlers played out the best, but most of the other categories folded. inCode believes that M2M will give a new set of MVNOs a chance to try again with services that don’t threaten a carrier’s core business and allow it to enter a new market, much like Amazon’s free Whispernet content servicevia the Kindle ebook.

10. Game consoles become Internet video source of choice 
Internet video’s rise to fame has been widely tracked in 2009, but thus far it has primarily been consumed directly on the PC as streaming bite-sized clips. Only early adopters viewed streamed or stored Internet video on their TV, according to inCode. The firm predicts that in 2010, the amount of Internet video viewed on the TV will double with gaming consoles accounting for almost half of the usage due to expanded content availability, existing revenue models and higher-definition programming. Internet connected TVs and over-the-top set-top boxes will trail gaming consoles and emerge after 2010.

“In 2010, everyone benefits,” Fuenzalida said. “Hulu has an opportunity, these other boxes do, the TV manufacturers do, so thankfully the rising tides will probably make everyone feel better. At the same time, when you look at Microsoft and other that will potentially be gathering a lot of momentum around that device, it will be beneficial for Hulu and others to figure out how to partner with those content vendors to make sure their content is equally presented and accessed.”

Bonus Prediction: Metrics will get a makeover 
As a result of the industry changes inCode is predicting, traditional measure of wireless operations, such as penetration, ARPU and churn, will go out the window. If consumers have multiple devices as anticipated, penetration levels of 300% per customer, multiple measures of ARPU and increased churn will have to result.