Mobile Industry: 10 Predictions for 2013

Gianluigi is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

If nothing else, 2012 has shown that the mobile industry is a pretty tough business to be in. Many handset manufacturers, wireless carriers, and component suppliers felt the pressures of mobile business sink in, and as a result, there were a lot of shake-ups this year. The following predictions are from CNET’s Executive Editor Roger Cheng, based on conversations with industry sources over the last few months, market trends, speculation, and a little wishful thinking.

Below you’ll find Cheng's 10 predictions and my take.

1. Consolidation continues
The wireless industry has long talked about the need for fewer service providers, and 2013 should follow through on some of the groundwork laid this year. SoftBank's controlling stake in Sprint Nextel and T-Mobile USA's merger with MetroPCS may signal a long-anticipated industry consolidation.

GL Cuccureddu: As Forbes elaborated, some of the smaller incumbents may be looking at ways to consolidate and grow through acquisitions.

2. No clear third OS emerges
Next year sees a vicious battle for the so-called coveted No. 3 spot for mobile operating systems behind Google's (NASDAQ: GOOG) Android and Apple's (NASDAQ: AAPL) iOS.

GL Cuccureddu: I’m not sure this vicious battle will be seen in 2013. Google and Apple control nearly 88% of the (smartphone) market in the US. Like AllThingsDigital also mentioned, it needs a disruptive innovation to break up this market and the entry of a third viable OS.

Who knows, it could be Samsung stoking the competition as expressed by NDTV Gadgets:

“McAdam said he also expects competition from Samsung, which focuses mostly on selling phones using the Android operating system, after it was recently dealt a bruising defeat in Apple's patent infringement court case against it in California.

"The dark horse here might be Samsung," McAdam said during a webcast of an investor call. "They've got the capability to go out on their own to do their own operating system. They've tinkered with it."

Samsung has developed a mobile operating system called Bada, which it uses for lower-end devices. It uses Android software for its top of the range devices.”

3. RIM in store for a shake up
If Research In Motion's (NASDAQ: BBRY) BlackBerry 10 isn't a success out of the gate, expect to see some agitation within the investment community -- or what's left of it -- that has patiently held out hope for a turnaround. Investors don't have unlimited patience, and an early stumble could mean pressure on the company to shake things up.

4. Spectrum grab
It's amazing what a few deals will do to the state of a crisis, right? All of the industry's biggest players, including AT&T (NYSE: T) and Verizon Wireless, all claimed a looming spectrum crisis in justifying their respective deals. After Verizon got its cable spectrum, and AT&T scooped up a number of smaller businesses, the rhetoric has changed greatly. Even Sprint and T-Mobile are sounding a lot more optimistic about things.

5. Google gets more active in wireless service
Sound far-fetched? Well, the recent rumors that Google met with Dish to talk about a new wireless service lends some credibility to this prediction.

GL Cuccureddu: It would rival the networks of wireless carriers such as AT&T and Verizon Wireless, according to people familiar with the discussions. So much for the consolidation of the wireless industry.

If this would happen, this could be the first next-gen player. Google can make a step closer to a real “Internet of Things” where all kinds of communication devices are connected to each other, being able to create user-centric experiences.

6. Softbank kick-starts Sprint
The infusion of $8 billion in additional capital should do wonders for Sprint's prospects in the wireless market. The company has been criticized for its slow deployment of 4G LTE, which has managed to avoid major cities while covering "key markets" such as Rome, Ga., and Rockford, Ill.

7. Higher focus on prepaid
Every carrier is going to rededicate itself to attacking the prepaid market, particularly with growth in the contract subscriber market quickly evaporating.

GL Cuccureddu: According to chief marketing officer Andrew Sherrard T-Mobile USA, in order to stay competitive with the top three wireless providers in the U.S. they are “skewing more towards prepaid contracts." He said that the prepaid market has exploded over the last few years, offering the fourth largest carrier in the nation a chance to differentiate itself from the pack.

8. Mobile payments whiff again
Next year is the year for mobile payments, really! Yeah, that line has only been uttered a few times over the past several years, and so far, we've got a few limited launches.

GL Cuccureddu: Here’s an article from the Business Insider that provides you with data on why 2013 could –really- be the year of mobile payments. It’s a matter of shifting consumer behavior and demands and a certain critical mass.

9. Apple, Samsung will dominate, but new entrants could mix things up
With the iPhone and, increasingly, the Galaxy S, brands coming with their own built-in hype machines, expect the two companies to continue reaping a majority of the profits. Companies such as HTC, LG, and Sony have struggled this year, and those struggles are expected to continue with few of them bringing out a product that really changes their circumstance.

GL Cuccureddu: If we look at Porter’s Five Forces model, it’s said that the industry and its current players should not expect disruption from these existing players, but new entrants that introduce either a much better product or value proposition or is able to disrupt with a substitute, as Apple did in the music industry.

Apple is the real winner of the mobile revolution at this point of time. Despite losing some ground to rival tablet devices, the iPad still made up 50.4% of Apple's Q3 sales in 2012. The iPhone dominates its market, accounting for nearly 75% of all profits in the mobile-phone industry. Apple’s ability to shine in mobile markets has made the company what it is today -- one of the most profitable publicly traded U.S. corporations. New entrants will have to be really disruptive, just as Apple was and still is.

10. Samsung and Apple reach a settlement
Let's file this one under the wishful thinking category. But I can't be the only one sick of writing and reading about patent lawsuits, right?

What do you think? Which prediction will have the biggest probability to happen?


GLCuccureddu has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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