EP #501: Why the state of our Mobile Union is rock solid – with Chetan Sharma

For those that are unfamiliar with Chetan Sharma you are now about to become disciples.

Chetan is the president of Chetan Sharma Consulting and is one of the leading voices and minds in the mobile industry and this episode shows why. Every year Chetan puts together a mobile industry predictions survey and with it comes great insight to help industry find their way in this sometimes confusing mobile world we have emerged into. This episode dives into the results of the survey and more.

No topic is off limits including what Chetan would do if he ran the mobile group at Microsoft, an assessment of BlackBerry’s future, Google’s strategy, Facebook’s ability to pivot to a mobile-first company and Amazon’s potential foray into the smartphone market. Chetan also offers up insight on the wearables industry and some ripe verticals ready for disruption for enterprising entrepreneurs and businesses.

This is NOT to be missed. Seriously.


Key takeaways from this episode. Click on the link and the video will take you to that clip

1. What will be the biggest story for the rest of 2014? 2:45
2. Is industry adapting faster to emerging technologies today? 7:00
3. What were the biggest stories of 2013 9:00
4. Is there room for a third mobile platform in mobile beyond iOS and Android? 16:10
5. What should Microsoft do about their mobile challenge? 17:50
6. Is there hope for BlackBerry? 20:25
7. Will there be an Amazon phone? 22:45
8. Does Google really have a cohesive strategy? 26:25
9. Can Facebook really become a mobile company? 30:20
10. What will the wearable landscape look like 32:00
11. What is the impact of the Internet of Things on business 34:45
12. Are there opportunities for robots and drones? 37:25
13. Where are the big opportunities for entrepreneurs in 2014 40:30
14. Which verticals are next for disruption? 42:30
15. What is the company to watch in 2014 46:00
16. Where do you consume content from? 47:10

Raw Transcript

Rob: Hello, everybody and welcome to Untether.tv. I’m your host and founder, Rob Woodbridge. This is, of course, that place you come to, to hear some insights from great minds in the mobile industry. I’m going to take a step above the software layer and above the app layer and above the business layer, and get a landscape, a layout of what is going to happen in 2014. My guest today is Chetan Sharma. He is the president of Chetan Sharma Consulting. These guys do strategic advisory work focused on evolving trends, emerging problems and opportunities, new business models and technology advances that take mobile communications industry to the next level. Chetan every year does a number of these things. Every quarter he does great surveys on kind of an assessment of how the quarter was in the mobile industry. And every year he does this entire year look- back at 2013 and a look forward at the things that are going to be propelling us in 2014 in the mobile industry.
If you haven’t been, go to ChetanCharma.com. He’s going to be on in one second. He’s also somebody that I look up to in this industry as somebody who is a bastion of knowledge inside of the mobile industry. So hang on for one second. I’ve got to put out a plea here, a light plea. I have set up something called a “patreon.” You can go to Patreon.com/Untether. This is a place where you can support this show, all of Untether.tv. It is a nice place where you can contribute to independent content creators. There are some great content creators up there, and what I’m asking for is a simple thing. It’s $1 a month. If you find value in this content, just go up there and support me for $1 a month. Become a patron of Untether.tv. If you do $25 or more per month, I will send you, I will, guaranteed, an Untether.tv mug. I know you will cherish it every day! But I would appreciate it if you find any value in here, please support Untether.tv by going to Patreon.com/Untether. All right, enough with the begging. That is it. I’m going to bring Chetan in right now. Chetan, thank you for coming on Untether.tv. I appreciate your time.

Chetan: My pleasure.

Rob: You know, it was my little beg. I hope you don’t mind.

Chetan: That’s all right.

Rob: You’ve got to beg, you know?

Chetan: Yes.

Rob: I keep saying that I am a terrible busker, Chetan. So if you make me go out and play music I will. But most people pay me to shut up not to play. So. Thank you for doing this. You know, it’s been quite some time since we’ve caught up. But I certainly spend a lot of time on your site, and, you know, take deep dives into your quarterly reports and your annual reports. I’m going to start out with one really important question which everybody’s asking me. And now I need an answer, so I’ve got you on the show and now I’m going to get that answer. What are the things that in 2014 are going to blow up just in a great way for the mobile industry?

Chetan: Blow up in a good way, right?

Rob: Yes. Like, absolutely take the world on fire in 2014.

Chetan: Yes, yes. I wish I had a great answer for you. But the way these things happen is they happen more progressively, more incrementally. And as such there is no huge, you know, one day we wake up and there is something nirvana happening in the industry. But for a time you see gradual improvements on multiple levels: at the network level, applications and devices, and new phone factors and so on and so forth. But I think the broader story that is clearly apparent worldwide is kind of the mobilization of every industry. I think that’s what’s going on, and that’s what really excites me. That every single industry is being impacted by mobile. Whether it’s retail, travel, entertainment, tourism, you name it. And it’s getting, kind of, unbundled and retaught as to how those industries should actually work. And like retail, for instance, retailers typically don’t have much of an idea about their customers. Because of using mobile they’re having a better grasp on who their loyal customers are and how to keep them engaged, besides having them be in the store. Even when they are in the store, having a better understanding of who they are. And just for an example, travel is the same way. People, just like they used to buy a lot of the tickets online, now they’re doing it on the mobile devices. And so commerce is gradually shifting from online into mobile.
There are several mobile only companies that are doing in excess of a billion dollars in revenue annually. And so I think it’s the fundamental transformation of various industries, and that’s the big story not only for this year, but probably for the next five, ten years. And depending on the regulations in a given industry — health, for instance — is generally, it’s, of course, from regulations, so a lot of information cannot happen. You have to find a way around it. But pretty much every industry, in its own way, is getting transformed. In some countries, the transformation is taking place much faster, and in others, it just depends on the circumstances and the competitive forces. So I think that’ll be the kind of ongoing story for some time.

And, within that, you’ll see enhancements in network technology that help you deliver much better content, much high-def content, as well as much more personalized content, in terms of intelligence layer in the network and the devices. Probably we’ll see, maybe not this year, but definitely in the next two, three years, some portable displays coming into the market, which will take us away from this rectangular screen that we have become accustomed to seeing for some time. And then applications, of course, I think application is the area which is definitely by far the most exciting, because you never know what can come in, and what can disrupt which industry. You know, like Uber is disrupting the taxi industry, and so on and so forth. And so I think the fact that with an app, you can create a tremendous amount of value and a tremendous amount of disruption is probably one of the most exciting parts of the industry.

Rob: You know, it’s funny, because the industries that you talk about have obviously been through some insane turmoil. Like, retail industry, restaurant industry, the travel industry. It seems like every force is against them at every turn of technology, right? When the PCs came out, it was about inventory, and inventory control, and management tighter.

Chetan: Mm-hmm.

Rob: And there was a cost associated with that. And then the web came out, and it was like, okay, retail is dead, because we can do it all online. Remember all those online retailers that popped up.

Chetan: Yeah. Mm-hmm.

Rob: Including Amazon, after the bust. And then mobile comes along and completely… you know, you’ve got this now… you know, adjectives are created. Show-rooming.

Chetan: Yeah.

Rob: And all of a sudden we’re talking about the complete destruction of retail. And the same thing’s happened with the travel industry. So, you know, are they adapting more to this technology now? Are they getting it a little bit more? Or is it still in that dire mode? Has mobile brought on, you know, a short life for the way we know these industries today?

Chetan: So with each… if you kind of look, go historically 30 or 50 years back, each cycle, the time duration for disruption shortens.

Rob: Yeah. Sure.

Chetan: And the panic button goes much quicker in these industries than it used to. And so clearly these companies are not dumb or stupid. They see the change coming. What often happens is it’s very difficult to change the DNA of the company to move in one direction versus another, given the pressure of quarterly earnings.

Rob: Mm-hmm.

Chetan: And so that’s what some of these executives have to juggle, and how to kind of manage and disrupt your own business while producing results for the Wall Street. And that dilemma will continue. And unfortunately, that’s the way the markets are set up, and you do have to figure out a way to set up groups that are totally independent from the mother-ship in a way that they can have the ability to disrupt your own business. Otherwise, somebody else will.

Rob: Sure.

Chetan: And if you don’t do that experimentation or disruption yourself, I think those companies generally tend to fall by the wayside.

Rob: Yes. And we start to see that, right? But you’re right. It’s a weird thing, because we’ve set up the markets in such a way, they’ve evolved as this industry has evolved, but they’ve evolved for certain expectations, where we as consumers seem to evolve much faster with our expectations.

Chetan: Sure.

Rob: And our attention span is so fleeting these days that, you know, we don’t care about the markets. I care about getting the best price for the product that’s in front of me, right?

Chetan: Yes. Absolutely.

Rob: And that’s a hard thing to balance.

Chetan: Yeah. Mm-hmm.

Rob: So what about… you know, if you look back into 2013, was there anything that was surprising that emerged out of that? And, you know, I always preface these things, when we talk about this, is that for a lot of people, the entire mobile revolution was just that. It’s like, one day they woke up and everybody was carrying a cell phone or a smartphone.

Chetan: Yeah.

Rob: But for somebody like you, who’s been in this industry, and has charted this industry for so long, it’s like, sometimes it might feel like a glacial, slow-moving thing. Especially, you know, the first 20 years of the mobile industry. Certainly not the last bunch. So when you look over at 2013, you know, what movement happened there that fills you with joy? That you were either surprised with, or that you predicted and came true, or that you just were completely in line with what happened. Chetan: Sure. I think the most volatile market has been the device market. In terms of who the players are at the top and how different players are coming in to[Vegas] and going out and so on and so forth. While all that happened, Samsung and Apple still dominate. Right? I think what’s probably surprising to a lot of folks, if you look historically, is how fast Nokia disappeared from the map.

Rob: And RIM, unfortunately. Right?

Chetan: And RIM. Yeah. Being the leaders of the space, and being completely wiped out through three percent market share in a matter of three to four years is pretty shocking, even for the device space. The problem with the space is that it’s very unforgiving. It doesn’t give you too many second chances. While Windows Mobile is coming up, and Microsoft has acquired Nokia, it remains to be seen what strategy Microsoft will take in 2014 and going forward. Do they do a Google and get rid of Nokia like Google did? Or do they truly embrace an integrated approach to devices like Apple? I think that decision has enormous implications on the whole ecosystem as well as for Microsoft.
The expiration of how turbulent the market has been in 2013 and into 2014 is probably one of the things I’ve been watching. The other big story has been the enormous growth of mobile data. Even in our survey, everybody agreed that mobile data and its implication on economies, countries, operators, and ecosystems has been tremendous. We take 4G LTE for granted. It has taken so much time to get here, if you look at, historically, 1G, 2G, 3G, and 4G. 4G was initially designed primarily for data services. Voice is actually not even launched in many markets. It’s primarily a data technology. How fast it has gotten traction, especially in the US market, the Korean market in Canada and UK. It shows you that once consumers get hooked to a certain way of doing things, there’s not going back. LTE, LTE advanced, and these standards have become part of our expectations, of what we expect from the networks. We demand more and more.

The other interesting part of the story has been how the computing landscape has changed. We talked about the device ecosystem. If you step back and look at the computing ecosystem, clearly with tablets and smart phones is having a tremendous impact on the PC ecosystem. [inaudible 13:12] PC for the first time. Invent the device side or the ecosystem side or [inaudible 13:15] side is having an impact. It impacts the rest of the food chain. Applications are now being built for Android and iOS, not really for Windows. So, that market is going to shrink, that market which used to dominate 99% of the computing space in terms of application development. That market is clearly shifting towards iOS and Android. That has implications for a lot of…

Rob: [Inaudible 13:40]

Chetan: A lot of players in the ecosystem. We obviously see and understand the consumer side. On the enterprise side, companies are just building. They hand out tablets, they hand out smart phones, and they just build applications on iOS and Android. That has significant implications in folks who were quite dependent on Windows as a platform for application development on an ongoing basis.

Rob: What an interesting perspective. We always talk about the implication of mobile on business, the outbound business like restaurant and retail. We talked about here. You never take into consideration the fact that all those companies that are driving all that revenue and employing all those people, they rely on, not a deprecating or an old system, Windows. The implication is there that the complexity of the build for mobile devices and time to build is a smaller component than it would be to build for desktop applications and enterprise. The implication for those guys is just as real as the retail industry. It’s in turmoil.

Chetan: Absolutely.

Rob: It’s amazing. Well, it’s not amazing. It’s amazing that you don’t think of those things, but it’s not so amazing if you’re in that business.

Chetan: I think it’s amazing when you are living it.

Rob: Yes.

Chetan: It’s hard to appreciate what’s happening, but if you kind of step back and look at a five or ten year time period. I mean changes that are happening are phenomenal. I mean from month to month, we are making tremendous progress.

Rob: Yes, and I mean I spent a considerable amount of months trying to help our national newspaper chain here. You know, they have 13 daily newspapers across the country in Canada, and trying to help them move into this world. And it’s the same kind of thing, you know, eight years ago their revenue just went right off a cliff.

Chetan: Yes.

Rob: Like nobody’s ever seen like that before. But I think if you would look back at what’s happened in all the other industries, there hasn’t been an industry like that. It’s been a gradual decline that if you look, and as you said, over the last ten years, yes, there are indications. But you think the newspaper industry went off a cliff, and has not recovered and will never recover in Canada anyway.

Chetan: Because the business model they relied on busted, right? So if you don’t adjust to the changing times things… It’s not that the news media industry left.

Rob: Has died, no.

Chetan: The newspaper industry was relying on advertisements and classifieds, and those things, that business model just completely eroded.

Rob: It evaporated over night. So when you think of the biggest platforms right now, I mean it’s obviously operating system- wise, it’s obviously android and iOS dominate. And you said the manufacturers: it’s Samsung and it’s Apple, right? Those are the dominant players? You know, but there’s always yet a great slide in your presentation talking about what’s that third platform?

Chetan: Yes.

Rob: Explain that. Like, is there really room for another platform here on a global scale? And can there be a third player in this?

Chetan: So I think it’ll be foolish to assume that the state of the platforms will stay constant for another five years. I think since we are in the state of destruction, changes are likely to happen. But in what form, we don’t completely quite know.

Rob: Right.

Chetan: If you look at, broadly speaking say, you know, in five, ten years there’ll be 5 billion smart phone users. Even if you get 10% of the market that’s still a huge market, right? And so from a [percentive] point of view, you might be lower but I think there’s room for the third player. The question is whether the third player is a forked android, or the third player is somebody like Windows Phone. And how much is Microsoft going to push Windows as a vehicle to drive that growth? You know, how critical is it to their overall strategy? If they want to be in services, then should they focus on services on android and iOS that dominate? Or should they push their own platform as a way to making androids the mobile ecosystem? And that question is still up in the air.

Rob: Should it be up in the air, Chetan? You know, if you’re taking over the helm of Microsoft, their mobile division, do you look at this and think, because I know there’s a lot of call for Nokia to come out with an android phone.

Chetan: Yes.

Rob: And, you know, it just seems like, and maybe Blackberry’s biggest problem was that they didn’t adopt android early on, and they…

Chetan: Yes.

John stayed with their ridiculous operating system…

Chetan: Yes.

Rob: Which is terrible. But it was the best we had at the time.

Chetan: Yes.

Rob: So do you think that…what would you do if you were Microsoft? Would you sit back and say, “Let’s just use android and go with the flow”? Or would you say?

Chetan: Yes, it’s a great question. I think I would probably take another shot at seeing if I can attack the feature phone market first.

Rob: Oh, really?

Chetan: One of the critical mistakes that Microsoft made in my humble opinion was that they went off android and iOS. And once a user is invested into an ecosystem, it’s very hard for them to pull that user out of that ecosystem because they’ve invested in applications. They’ve invested in learning how these devices work and so on and so forth. And, you know, they have built that loyalty to that ecosystem. But feature phone users are, you know, that’s the origin territory, especially in a lot of the emerging markets. And so I think if Microsoft went after those users and got them converted and start to get their share above 10%, I think then they have a shot. If they continue to go after iOS and android, I think the market has spoken in the last year. That market is really not interested. Consumers are really not interested. Even though Windows is a great operating system.

Rob: Yes.

Chetan: And they have done a great job. But I think it’s something like what happened to Zune, if you remember?

Rob: Of course.

Chetan: They are having a “Zune” effect, meaning that if you are late to a market the market just says, you know, it rejects you. And so they’re getting “Zuned” out of the phone market because of that reason. But if they attack the feature phone market, the emerging markets, I think or even the develop market, they go after those users, I think they will have a better shot.

Rob: It’s funny that you’re using a Microsoft product to describe. Like, you’ve created a verb around another Microsoft product. How many of these attempts can they make before it’s, you know, it’s zoomed and then it’ll be windowed and then it’ll be. . . You know, what’s the. . .

Chetan: Yeah.

Rob: Their one shining star is obviously the Enterprise and the Xbox on the consumer side.

Chetan: I mean, Enterprise, they’re very, very strong and so they should leverage that strength, especially on the tablet side.

Rob: Yes.

Chetan: But on the phone side they have to attack the different market.

Rob: It’s funny though, like you know what about, what about . . . Look, I always think that, you know, Blackberry’s failing here on the handset market was the fact that they were all in. Right? That was their number one, that was their only line of business was the phones. Right? And when you go a year and a half without releasing a phone, you know, you expect something like this to happen.

Chetan: Yeah.

Rob: But Microsoft has, you know, all of these different one billion dollar businesses that can fund indifferently, like Apple with a war chest.

Chetan: Yeah.

Rob: Um, so is there hope for a company like Blackberry? Do you see anything? Like I might, I see somebody with a Blackberry, I’m Canadian.

Chetan: Yeah.

Rob: I see somebody with a Blackberry and I’m like, “Uh, I can’t talk to you anymore.”

Chetan: Yeah.

Rob: Like, you know, it’s almost, is there hope for this company?

Chetan: You know, it’s, it might operate on a small leash in certain markets but as a device player I think it’s days are gone.

Rob: It’s done, yeah. So sad, eh? But that’s the market, right?

Chetan: That’s the market. Yeah, I mean, they didn’t acknowledge the reality and by the time they did it was too late.

Rob: It was way too late. And then, you know, the other side of that is a good lesson is that they acknowledged the market but then they attacked the same market. They didn’t think upriver, right? They just didn’t think. You know, RIM’s greatest when they were RIM, greatest thing was that they thought ahead of time. They were, they blazed a trail for these devices and then they became laggards and then they tried to compete, you know, two years behind everybody else. What they should have done was just kind of looked five years ahead and build towards that.

Chetan: Yeah. I mean, and then there were [inaudible 22:11] like they got distracted by the tablet and that sucked in a lot of resources. It had a lot of product flaws in terms of features [inaudible 22:20] that they launched with and so it didn’t really have any traction and that’s what’s set them back. I mean, those resources could have applied to the phone market. And as you said, I think they should have adapted Android much earlier and that would have given. . . Because Blackberry ecosystem was just gone. Right? There was no ecosystem, this is a game of ecosystems. And so had they embraced that, leveraging their Enterprise security skills and reputation they could have had a good leverage in the marketplace. But unfortunately they didn’t see it that way.

Rob: Unfortunately now they’ve just been, you know, basically they’ve become a BBM carrier. Right? Ultimately that’s their value. What, I mean, what company out there do you think has a chance? You know, there’s all these rumors, everything floating around here obviously with iWatches and this wearable industry that is emerging quite quickly. And you know Sony, really becoming, moving into becoming a hardware company ultimately and Under Armor doing the same thing, becoming a software company. And then there’s this company that I have a huge amount of respect for, and I think a lot of people do, it’s called Amazon. Right? That is it is sitting there, you know, as the gateway to commerce and now the gateway to technology. And the rumors are floating around that these guys are going to be coming out with a device too. Do you think? You know, they have their tablets with a smart phone. Is that something that you foresee in 2014 that they can launch and be successful with?

Chetan: So the issue with Amazon is, you know, what’s the business model they’re going to launch with?

Rob: Right.

Chetan: You know, unless they can offer a destructive business model in terms of pricing, you know, why would you bother? Right, because they can have the application running on pretty much all the devices and do all the commerce [inaudible 23:00] themselves. They have the Kindle, the suite of devices. But if they want to launch a smart phone, it has to be something destructive. From a pure price point, there’s nothing lower they can offer in the market that doesn’t already exist. Right? I mean you can get iPhone for free, Galaxy for free. So what are they going to offer? I mean, they could. . . The only way they could attack is if they start subsidizing some of the data plans and that’s a tricky proposition because you’re committing, you know, hard cash for something that may or may not come to fruition. But that’s the only angle that I see them taking to attack the smart phone market. Otherwise, I think there’s no point just have your app on all the devices and make loads of money.

Rob: So do you think it’s likely that they’ll come out with a phone?

Chetan: I think the phone has been in the works for the last two or three years. It’s not a big secret that they have not been working on a device. I think, I’m not sure if they have come to terms with a business model. I think it comes down to that, how confident they feel, the business model they come out with in terms of subsidization of data charges and can that, can it really compensate with the comments from that taking place on the device. And so I think once that kind of dissent takes place, they might come out. So it’s a jump ball.

Rob: Yeah. I’d say it’s interesting, because you’re right, is that, you know, one of the great things about Amazon is the fact that you can get a… buy product on any device.

Chetan: Yeah.

Rob: And get a book on any device, and read the book on any device, and then listen to it through Audible.com, same thing, and then make recommendations through Goodreads and the same thing, right? So they’ve got this great little ecosystem. And injecting a phone is an interesting thing. I know that it was the number one thing that people assumed would happen in 2014.

Chetan: Yeah.

Rob: But, you know, Amazon has been one of the more forward-thinking companies when it comes to connectivity, with Whispernet and, you know…

Chetan: Yeah. Sure.

Rob: Offering these kind of things, right?

Chetan: Yeah.

Rob: And playing with advertising-sponsored devices, right? So…

Chetan: Absolutely. I mean, they have done a… I think in advertising on devices, they have done probably the best job in the industry.

Rob: Yeah.

Chetan: Even, I would say, better than Google. And so they have done a better job of advertising on devices. And then on Android devices, then, like Google has, in terms of building… using the Kindle display as a way to subsidize the price, so, you know, you could have a break in the device price. But the question is, can they do that on an ongoing basis?

Rob: Right.

Chetan: You know, especially with the monthly subscription of data. And it’s difficult to see the business model work out.

Rob: What about Google? You know, one of the predictions that you had in your deck was that they were the most likely to make acquisitions. And lo and behold, what, three days into the year, didn’t they buy Nest, right?

Chetan: Mm-hmm.

Rob: For a huge amount of money.

Chetan: Yeah.

Rob: What… you know, these guys are in everything, everywhere, all the time.

Chetan: Yeah.

Rob: From robotics to self-driving cars to, you know, the basis for Android, to…

Chetan: Yeah.

Rob: You know, they’re talking about Chromium now as a, you know, as an operating system.

Chetan: Yeah.

Rob: And moving into home automation and things like the Nest. What… they’re everywhere.

Chetan: Yeah.

Rob: But is this a cohesive strategy?

Chetan: I think so. I mean, I have a huge amount of respect for Google.

Rob: Sure.

Chetan: And their strategic thinking. I think they have been very strategic about doing certain things. I mean, you could argue certain decisions were questionable, but, you know, typically most companies go through that phase. But by far, I think Google is the most interesting company in the mobile ecosystem, because they’re not afraid to A, take chances, and their minds go, you know, 360, in all directions.

Rob: Right.

Chetan: And no industry is off the table. You know, whether it’s auto, or retail, or payments, or whatever, they will give it a shot. They’re not afraid of giving a shot. And they really think big. Yeah, you know… so in terms of changing the dynamics of the industry, I think Google is by far the most interesting company to watch, in what they do and, you know, how they play with the ecosystem. And the good thing about them is they learn. They’re fast learners, as well. I mean, the fact that they quickly realize that [inaudible 30:02] thing is not going to work out, so they offloaded it and, you know, squarely focused on the software side, instead of working on the end ware device side.

Rob: They don’t get emotionally attached to these products, right?

Chetan: No. Yeah.

Rob: So they don’t bring a company in and say, “Oh, yeah, we love you, Motorola.”

Chetan: Yeah.

Rob: It’s like, no, get in. No, get out.

Chetan: Yeah.

Rob: On to the next, right?

Chetan: Yeah. Yeah. And they’re fast… you know, very decisive decision-making, because a lot of big companies get bogged down by, you know, poor decision-making, or decisions that take a long time. And Google’s clearly not one of them. And I think it’s pushing the boundaries.

Rob: Now, when you start to see that they’re deploying balloons into the lower atmosphere to, you know, beam wi-fi down to a place that doesn’t have any internet activity, you start to think, “Okay, this is a very different company. This is a very different company.”

Chetan: The way they look at it is they look at the entire stack.

Rob: Yeah.

Chetan: You know, where the cost and revenues is going. And they say, “Well, where can we attack?” You know, whether it’s computing, you know, both Google and Facebook are really good at kind of low-level computing.

Rob: Yeah.

Chetan: Built their own computing infrastructure. And so they look at the cost and revenue at every level of every vertical and see… and just attack where the opportunities are. Having said that, their fundamental business is still advertising.

Rob: Yes.

Chetan: And so everything has to come back to that notion of doing a better job at advertising.

Rob: And do you think that there would be a gradual decline in the revenue in advertising? As a percentage of revenue. I mean, I don’t think it’ll decline as an overall. But… or do you think it’s going to be just one day, they’re going to be a robotics company, or a home automation company. You’re going to wake up, and it’s going to be a completely different Google. We’re all going to be driving in Google cars.

Chetan: It’s hard to see that. I think it’s still primarily being driven by kind of a… it’s a data-driven company, whether it’s focused on advertising or focused on doing… starting to do retail and commerce.

Rob: Mm-hmm.

Chetan: I think it still fundamentally will be kind of a data driven company. Advertising will stay the biggest component of their revenue for probably the next 10 years.

Rob: You know, they’re innovating around this, with, like, partnerships with, like, say, Uber, where you’re walking down the street and a mobile ad pops up of a product that you’re interested in purchasing, and you click on that. And they’ve struck relationships with the retailer to say, “Okay. We’ll pay for the transportation.” So, they send an Uber cab to bring you to that store. Those are out of the box thinking that I freaking love. Right?

Chetan: Yeah. No, they’re great.

Rob: Yeah. What about that other company that you mentioned? This newly found mobile gospel of Facebook? Do you think that these guys can make that transition? Sure, they’re a mobile company. They’ve also got 1.1 billion people that use their services. Are they undervalued or overvalued for the revenue they’re generating from having one seventh of the population of the planet on their service?

Chetan: So, I think any company that has 1 billion plus users deserves enormous respect.

Rob: Absolutely. Beyond a shadow.

Chetan: But the question is whether you can keep that level of engagement with those users.

Rob: Yeah.

Chetan: And so far, Facebook has shown that they can. And they’re also fast learners. They saw the mobile thing is coming. They were not doing great. They transitioned from HTML5 to native apps . . .

Rob: Yeah. Big, big move.

Chetan: . . . fairly quickly. And they went from doing zero to north of a billion dollars in a very short amount of time in mobile. But Facebook plays primarily on the software application layer. It doesn’t tinker around with, say, platforms or can’t, because it’s too late . . .

Rob: Mm-hmm.

Chetan: . . . for devices. And they tried to do things, but it didn’t work out. So I think I would expect them to play a substantial role in advertising and payments for some time to come.

Rob: And they do move quickly, because 2013 saw them launch Home, right?

Chetan: Mm-hmm.

Rob: Their skin for Android. And now, we don’t hear much about that anymore . . .

Chetan: Yeah.

Rob: . . . do we?

Chetan: Yeah.

Rob: Yeah. So, they recognized their failures, and they don’t try to push it. A company like Microsoft often takes their failures and amplifies it by trying to push it out even more, right?

Chetan: Oh yeah.

Rob: Mm-hmm. So, yeah. Yeah, billion people, you’ve got to have a lot of respect for that. What about the wearable companies, like FitBit and the likes that are carrying the brunt of the sales right now? Do you see that, things like Google Glass, do you see those things hitting a mainstream audience this year?

Chetan: Sure. Certainly. And this year is just too questionable. But variables and the way I see, variable spaces, you will clearly have a breaking out of companies at the top tier who are either brands or they are kind of morphing into luxurious goods, the way people think of high-end products.

Rob: Mm-hmm.

Chetan: And common commodity priced products, either coming from China or just very focused on feature functionality. Because the components that go into a FitBit or Basis are a plain one. There’s nothing, no rocket science behind it. Even the algorithms are pretty straightforward. Pretty much everybody has the same feature functionality.

Rob: Yeah.

Chetan: And so, how do you differentiate? I think you differentiate either by brand value, associated with a particular product. So, say Apple comes out with a measurement-based device that’s also health related, I think it can command a premium.

Rob: Yeah.

Chetan: Because Apple is considered a high-value brand. But if a startup is launching something similar, it’s not going to get the same pricing. And pretty soon, I think we’ll see a flooding of the market with very cheap variables. And so, there’ll be quite a [Inaudible 30:39]. A lot of companies will probably go out of business, because they just cannot survive that commoditization phase. Because of the likes of Samsung, they can flood the market with a lot of variables, at a much lower price. I think that’s where consumers will go.

Rob: Yeah.

Chetan: And so it’s hard to see where the other 15 or 20 companies will stay. They might do some very geography-focused marketing and strategy play. But largely, I think you’ll see the segmentation of variable companies very shortly.

Rob: And I think that there’s a natural, well, there seems to be natural conversation around what happens with Apple’s iWatch? And we know that the people they’re bringing in there, will make us believe that it’s far greater than just a time piece or . . .

Chetan: Mm.

Rob: . . . or a connected device that is a pedometer.

Chetan: Yeah.

Rob: As you said, like, a health device . . .

Chetan: Mm-hmm.

Rob: . . . which is a very interesting piece. And if you look at the shelves on an Apple store, you start to see, right? There are health devices on the store, right?

Chetan: Mm-hmm.

Rob: But it always leads, the conversation, it shouldn’t flow, but it does, from these wearable devices to this whole concept of the Internet of things that is emerging, finally, right?

Chetan: Mm-hmm. Yeah.

Rob: The ten year slow emergence of the Internet . . .

Chetan: Mm-hmm. Yeah.

Rob: . . . of things with sensors, like, Beacon, like, Estimotes and . . .

Chetan: Yeah.

Rob: . . . iBeacon.

Chetan: Yeah.

Rob: And the announcement that I think 13 stadiums in the United States are going to be beaconed up for the beginning of the baseball season this year which is fascinating to me. How much of an influence are those going to have on all of these verticals like retail, entertainment and the homes?

Chetan: Sure. Network values increase as you add more notes. If you going to have multiple sensors around you that are giving you pertinent information about how you should lead your life, whether it’s from a health perspective, work perspective, family, communication and what not, I think that’s all really good. It makes us more productive as long as you can manage it properly. Don’t get too enamored by these things and get too carried away. I think the market is going to grow slowly. It is a primarily developed market, a phenomena. You’re not going see multiple sensors in markets like India or China any time soon on a per subscriber basis. Just by definition, the market is going to be smaller initially but then I think it’s going to grow tremendously. I think the bigger opportunity in [inaudible 36:40] things or M2M is in the enterprise space. If you look at what Intel and General Electric is doing with industry automation, I think that is where a lot of value comes into play. As you start putting in these sensors in automobiles, jet engines and all sorts of wind turbines and so on and so forth, constantly collecting data that helps you reduce the wear and tear on these machines, reduces the cost of maintaining these machines and just do a better job of counter productivity. Instead of waiting for something to break, you are proactively doing something about it. I think that has much more value to the overall ecosystem then say [inaudible 37:30] variables, which obviously gets more headlines but more value is going to get generated in the enterprise space.

Rob: I 100% agree. Preventative measures rather than down time is what those things can benefit. And making humans a little bit more efficient in accessing these things. What about drones? Do you see opportunities for robots and drones? We went through that phase once with Amazon and Google. Do you see at some point, not in 2014, local drones?

Chetan: There’s clearly a role for automation within enterprise and home environment. In some shape and form, it’s already taken place in war zones. People send drones to take care of the difficult stuff, look at a land mine or to spy on this and that. That’s happening in certain areas in Saudi already. Whether it will come into the home environment or not? I think a lot depends on the price points and how good these products are. I think that will determine how fast they get adopted in the mainstream. So far, if you look at what’s happening in Korea and Japan which are probably the two countries most forward in the space, they’re using these small robots primarily for entertainment. Kind of working and entertaining with the kids, you play with them. Some forms of robotics are already entering the home in terms of automated windshield cleaners, vacuum cleaners and so on and forth. We’ll probably see these devices coming into the house tackling certain tasks like reminding the older generation about their medicine, saying it’s time to get up and take your medicine and so on and forth. In 10 to 15 years time, I think they’ll become much more acceptable and the price points will be set just like you buy a smartphone.

Rob: I interviewed a company called Remotive [SP]. I don’t know if you’ve heard of these guys. They’re a San Francisco based company. Actually, they’re a Las Vegas based company. They basically have a little tank chasis, and they use your smartphone as the smarts. So, it’s software based with a chaises. It is a little robot. They wanted to de-marketize home robots. It’s a toy but it starts there. Doesn’t it? With the toy, the comfort level, and then all of a sudden it’s cleaning your house and driving you around. I’ve got to leave the folks that are listening and watching this with some tactical advice. So I’ve got two pieces. Like, where are the big opportunities in 2014 for businesses to be looking at? So whether that’s an entrepreneurial business, an entrepreneur who’s looking to get in business, or somebody who is trying to extend their business, where do you see an umbrella? Where do you see the opportunities in their software, hardware, it doesn’t matter? And then, what do you think is going to be impacted the greatest? What industry is going to be impacted? What’s the next industry to either fall or rise as a result of mobile? So the first question is what are the opportunities for businesses these days?

Chetan: I think businesses should truly look at the cross structure of any industry vertical. Pick any; energy, retail, travel, transportation, IT and whatnot, and see where the inefficiencies are. And can you build a business trying to take care of a certain set of tasks in that industry that have not been done well? Can you take out the human element and automate certain functions to provide better service to the consumers? And so I think opportunities are everywhere. Just take advantage of the network layer, device layer, and the application layer and attack specific inefficiencies in various verticals and geographies. Because each geography is different in how they perceive the various verticals. And I think there are opportunities that come up all over the place.

Rob: You take that approach which is, you know, look for the weaknesses of the places, as you said, in each vertical. I mean I’ve talked to a lot of entrepreneurs who are attacking the home automation market. Is it, you know, either or? I mean home automation is so broad, right?

Chetan: Yes, it’s so broad. You have to really focus on are you going to be focused on security? Are you going to focus on energy management? Are you going to be focused on entertainment?

Rob: Right.

Chetan: Communication, video conferencing? Are you having all the devices talk to each other? Or, you know, are you going to need a platform? Clearly, there can’t be too many platforms by definition. So what element are you going to be focused on? And then, the key question is how do you go about making technology, right? Are you going to be betting on the wrong horse? By the time your product comes out that platform is no longer viable or appealing? Or do you end up picking a wrong partner who might not be as strong in six months? So those are sometimes very hard to guess how these things play out, but, you know, from a technical point of view you have to look at each step and figure out what’s the right approach based on the data you have at the moment.

Rob: All right. So what industry or what vertical idea, I suppose, is ripe for disruption either in a good way or a negative way over the next little while?

Chetan: I think the auto industry is clear, auto and health. I think these industries because A) they’re both heavily regulated and they don’t change unless some upstart like Tesla comes into their space and really tries to destruct the space. And all of a sudden it’s an exciting space. I think these two industries have tremendous potential to get completely destructed, especially health given that 20% plus GDP, global GDP goes to health.

Rob: There’s money there.

Chetan: I think it’s tremendous inefficiency in the system in every single country.

Rob: Yes.

Chetan: And so you can find ways to do medicine and care in using mobile, which you can. I think that can have a tremendous impact to a society. I mean, even if you look at how hospitals are getting designed, they’re getting designed on the premise that patients will still come to the hospital with a completely wrong premise 10 years from now. Because care and measurements from the consumer or the patient is going to be actually done outside the hospital, inside. And so inside the hospital you will have to have ways to absorb that data in a way that makes sense and provide guidance to the patient. Versus having a line of patients outside the hospital.

Rob: You know, an upcoming episode of Untether, I sat with a UI/UX expert, Johan Soren. And he talked about that exact kind of concept which is literally, we’re shedding skin everywhere. We’re shedding fluid, bodily fluid everywhere. So why not turn our houses or our bathroom into a petri dish for us. So every time you go to the wash room it does samples automatically. I mean it alleviates the pain from the hospitals or from your doctor.

Chetan: Yes.

Rob: It just flags things that are abnormal, but it does it automatically. When you brush your hair and a little piece of hair falls into the sink, you know, it is analyzed and assessed and…

Chetan: Yes.

John:…sent to your doctor, right? So that’s – when we start to talk about that business, is that what we’re talking about where we’re health and monitoring?

Chetan: Absolutely. I mean it can go even further. I mean you can have sensors inside your body that can help predict, you know, how many days before you get the heart attack because of your arteries, how clogged up they are? It’s a shame that we don’t have the system in place today because technology kind of exists, but regulators have typically been behind the curve.

Rob: I love that. I mean some people are afraid of this, but, boy oh boy, I think as you said this has been a steady evolution. It’s not going to happen overnight. If we told you 15 years ago that you would drive a car that could parallel park for you, you would have been like, ‘No way,’ right?

Chetan: Yes.

Rob: Now, that’s accepted, and it’s just a natural stage that pretty soon we’re going to be all in Google cars or self-driving cars. I think that it’s the humans that have to get over this, right?

Chetan: Yes. You know it took Google, somebody like Google to come up with the concept of a driverless car, and I understand why they’re really not thinking about it.

Rob: No, exactly, out of left field. It’s OK. We’re going to strap a backpack on hikers and take photos of streets, and we’re going to create the autonomous driverless car. Speaking of companies, this is my last question then I have just one small question after that, so this is my last big question. What company in 2014 is your company to watch?

Chetan: I think Uber is doing a lot of . . .

Rob: Uber? Yes.

Chetan: It’s kind of challenging that traditional notion of regulation of an industry that has been around forever and hasn’t changed. It’s making people think how transportation should actually take place and can have fundamental impacts on how we buy cars, how we go from point A to point B, and it might evolve into something that is very accepted in the near future.

Rob: Yes, I would even add to that the curb to doorstep challenge of delivery. These guys can occupy quite a huge space around delivery, right?

Chetan: Yes.

Rob: Very disruptive, yes. Uber for me was one of the choices that . . . I sure think you can’t ignore this company, can you?

Chetan: Yes.

Rob: All right. Where do you get your data, your information from? I know you ask a lot of people, but are there any books that you read? Any tools that you use that you can share here? Do you have a favorite book that you’ve consumed in the last little while?

Chetan: Mainly my research work is I work with a lot of players in the industry and across the ecosystem from the likes of operators to internet players to startups to VCs. I get to work across geographies and so that helped me understand where things are going. I keep my ears to the ground. I collect and update my data on a regular basis so that gives me insights that form my strategy.

Rob: It’s great. If you haven’t taken a look at this, I employ you to go to chetansharma.com. That’s C-H-E-T-A-N-S-H-A-R-M-A.com. You give away this data. It’s amazing. You should be using this as part of your data points to chart your business going forward. I believe you have to take in as much as you can just like Chetan does in order to be able to get a bigger picture of what it is. You have to step out of what your business is and do what Google does is look around and see what it can be. Is that a good assessment?

Chetan: Yes. Thanks.

Rob: Wow. Well, I could monopolize your entire day. This could be the 13- hour episode. If I stop now I think we would get away with this being a shorter than that episode. Chetan, I can’t thank you enough for doing this. I really appreciate these conversations and great insight. I love what you do so please don’t stop because then we wouldn’t have a lot to talk about. Promise? We’ll send people to chetansharma.com and to also subscribe to your slide show account as well because that’s where you’ll get a lot of the presentations and go back and take a look at this. I know that you found some great insight in this episode, so I employ you to come back. We’ll have Chetan on again in a years’ time. How does that sound?

Chetan: All right. Sounds good.

Rob: We’ve been speaking with Chetan Sharma. He is the president of Chetan Sharma Consulting. They do something called the Mobile Future Forum which is what we’ve been talking about and a little bit more around what is going on in the mobile industry past, present, and future. Go and download these presentations at Chetansharma.com. Go to Patryan.com/untether to go and contribute if you found this was worth a buck. Boy, I think it was worth more than that. I think it was worth $10,000, but I would take a buck at Patryan.com/untether. Wherever you are and whatever you are doing, I appreciate you guys watching this. Please, please come back. We’ll see you again next time on Untether.TV. Thank you, Chetan.

Chetan: OK. Thanks John. Take care.

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About Chetan Sharma
Chetan SharmaChetan Sharma is President of Chetan Sharma Consulting and is one of the leading strategists in the mobile industry. Executives from wireless companies around the world seek his accurate predictions, independent insights, and actionable recommendations. He has served as an advisor to senior executive management of several Fortune 100 companies in the wireless space and is probably the only industry strategist who has advised each of the top 6 global mobile data operators. He is considered a leading authority on the mobile data technologies and consumer trends. Some of his clients include NTT DoCoMo, Disney, KTF, China Mobile, Toyota, Google, Comcast, Motorola, FedEx, Sony, Samsung, Alcatel Lucent, KDDI, Virgin Mobile, Sprint Nextel, Skype, AT&T Wireless, Reuters, Juniper, Qualcomm, Microsoft, Reliance Infocomm, SAP, Best Buy, Merrill Lynch, American Express, and Hewlett-Packard.

Chetan is the author or co-author of twelve best-selling books on wireless including Mobile Advertising: Supercharge your brand in the exploding wireless market and Wireless Broadband: Conflict and Convergence. He is also the editor of the Mobile Future Forward Book Series. His books have been adopted in several corporate training programs and university courses at NYU, Stanford, and Tokyo University. His research work is widely quoted in the industry. Chetan is interviewed frequently by leading international media publications such as Time magazine, New York Times, Wall Street Journal, Business Week, Japan Media Review, Mobile Communications International, and GigaOM, and has appeared on NPR, WBBN, and CNBC as a wireless data technology expert. He is also the chief curator of the mobile thought leadership executive forums – Mobile Future Forward and Mobile Breakfast Series.

Chetan is an advisor to CEOs and CTOs of some of the leading wireless technology companies on product strategy and Intellectual Property (IP) development, and serves on the advisory boards of several companies. He is also a sought after IP strategist and expert witness in the wireless industry and has worked on and testified in some of the most important cases in the industry such as Qualcomm vs. Broadcom, Samsung vs. Ericsson, Sprint vs. Verizon, Openwave vs. 724 Solutions, and Upaid vs. Satyam. Chetan is a senior member of IEEE, IEEE Communications Society, and IEEE Computers Society. He has Master of Science degree in Electrical Engineering from Kansas State University and Bachelor of Science degree from the Indian Institute of Technology, Roorkee.

About the author

Rob Woodbridge

I'm Rob, the founder of UNTETHER.tv and I've spent 14 years immersed in the mobile and pervasive computing world. During this great time I've helped some of the most innovative companies grow their business through mobile. If you are in need of a mobile business advisor or coach, connect with me here to get things rolling.

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