EMERGING OPPORTUNITIES IN MOBILITY: 2016-2020 · • The number of mobile-connected devices per cap-ita will reach 1.5 by 2020. Based on current popula-tion forecasts, 1.5 mobile

2016-2020

Published:8/23/2016

Copyright © All Rights Reserved

DANIEL NEWMANPrincipal Analyst

OLIVIER BLANCHARD Senior Analyst

EMERGING OPPORTUNITIESIN MOBILITY:2016-2020

TECHNOLOGY INSIGHTSFOR BUSINESS LEADERS

FUTURUM PREMIUM REPORT | 2TECHNOLOGY INSIGHTSFOR BUSINESS LEADERS

TABLE OF CONTENTS

Executive Summary

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Executive Summary

The State of Mobility in 2016

Introduction

Microlocation

VR Integration

AR Integration

AI Integration

Key Takeaways

Resources


Futurum Research provides research, insights and analysis to the market that help tie leading and emerging technology solutions to strategic business needs. The purpose behind each of our reports is to help business executives and decision-makers gain a better understanding of the technologies driving digital transformation, connect the dots between the practical business requirements of digital transformation and the forces that impact employees, customers, markets and experiences, and take appro-priate action regarding critical digital transformation opportunities.

About Futurum Research

Executive Summary

This report will focus on four key emerging mobile-related opportunities gaining ground between now and 2020 that we feel you should be aware of:

• Mobility and microlocation

• Mobility and Augmented Reality (AR)

• Mobility and Virtual Reality (VR)

• Mobility and Artificial Intelligence (AI)

This report will begin with an overview of the cur-rent state of mobility and then explore mobility into the future from today through 2020. Before focus-ing on how microlocation, AR, VR and AI can be used to inject new functionality into your mobile strategy. We will also touch on the three pillars of experience design in the age of Digital Transforma-tion - Mobile First design, Omnichannel Experience design thinking, the importance of always building paths of least resistance – and how they relate to these four mobile integration plays.

EXECUTIVE SUMMARY AND FUTURUM RESEARCH OVERVIEW


Introduction

One of the most significant forces driving digital disrup-tion is mobility, and particularly mobile computing. Most of us now carry enough computing power and internet connectivity in our pockets to access every corner of the web, work remotely, manage IT systems, watch movies, download music, book flights and hotels, shop, control smart appliances and drones, and perform hundreds of other tasks that once required large desktop computers. Just over four decades after the world’s first mobile telephone call from handheld subscriber equipment on April 3, 1973, the state of mobility around the world is staggering in both scale and scope. Here are some numbers to help illustrate how far we have come, and how quickly the mobile ecosystem is evolving:

• Globally, there were 7.9 Billion active mobile devices and connections in 2015.

• The mobile ecosystem is still generally divided be-tween cellular phones with no or limited internet ca-pabilities and internet-capable smart phones. Though smart phones currently represent only 36-40% of mo-bile devices globally, they account for nearly 90% of all mobile data traffic.

• Data-wise, average smart phone usage grew 43% in 2015, compared to 2014.

• The number of mobile-connected devices per cap-ita will reach 1.5 by 2020. Based on current popula-tion forecasts, 1.5 mobile devices for 7.7 Billion people in 2020, amounts to 11.5 Billion active mobile devices around the world This is compared to 7.9 Billion in 2015).

• Global mobile data traffic grew nearly 75% in 2015, with Middle East and Africa averaging roughly 117% growth, Asia Pacific, Latin and America, and Eastern Europe averaging 83%, 73% and 71% growth respec-tively. The more mature mobile markets of North America and Western Europe still managed to grow by 55% and 52% respectively. Overall, this shows strong global growth with no significant signs of slowdown.

• Global data traffic and usage are also growing at an astounding rate, with an expected increase from 3.7 ex-abytes per month in 2015 to a mind-boggling 30.6 ex-abytes per month by 2020. This is an eightfold increase in just five years.

• In 2015, 55% of all mobile traffic was video. By 2020, video will represent roughly 75% of all mobile traffic.

These data points help illustrate the degree to which mobility will remain a primary vehicle for change, inno-vation and disruption for years to come.

THE STATE OF MOBILITY


THE FOUR MOST PROMISING EMERGING OPPORTUNITIES IN MOBILITY

Microlocation:While standard LBS uses a combination of GPS and accelerometer data to place a mobile user in a par-ticular location and capture both their speed and direction of travel, microlocation uses short-range Wi-Fi and bluetooth beacons and sensors to help place the same mobile user in a specific aisle or department inside a store.

The technology is fairly simple: When a user’s phone comes within range of a Wi-Fi signal, it sends back a signal to the beacon, telling it that it is within range. A network of beacons and sensors spread out around a store can then map, with a high degree of specific-ity, where every phone searching for a Wi-Fi signal is inside the store. This data can be captured, mapped, and either analyzed in real time or analyzed along a timeline to identify recurring patterns.

THIS KIND OF TRAFFIC MAPPING CAN BE USED IN SEVERAL WAYS:

1) Traffic Analysis: By plotting customer traffic on a virtual floor plan of the store, customer foot traf-fic patterns can be analyzed, giving store managers valuable insight into what parts of the store see the most traffic and least traffic. This data can help re-tailers identify the impact of high traffic areas on sales of particular items, for instance, as well as de-sign floor plans that naturally steer visitor traffic into specific parts of the store.

2) Visitor Analysis: The same data can indicate to retailers how many visitors are in each of their stores right now, or how many visitors their stores saw an hour ago, or on a specific day, or all month. This data can then be used to spot visitor trends

over time Fr example, Is a store’s management see-ing an incremental drop in visits quarter over quar-ter, or an increase in visits?

3) Presence Analysis: The same data can also indi-cate where customers tend to spend the most and least amount of time during their visit and where they stop (presumably to look at an item), and how long they tend to stay in one place before moving on. The same data can also show retailers where visitors don’t stop at all inside their store, and the impact this may have on the sales of specific items based on where they are in the store.

4) Sales Analysis: All of the above data can then be overlaid with sales data to determine what impact, if any, visitor data, traffic patterns and presence, has on sales. In regards to visitor data, the insights can help shed some light on the relationship between traffic volume and (a) total revenue, (b) net trans-acting customers, (c) number of transactions, and (d) average transaction value. Traffic patterns and presence, on the other hand, can shed some light on how well an item sells based on where it is lo-cated in a store.

5) Customer Experience: While customers spend-ing five to eight minutes in a particular section of the store may result in a high probability of pur-chases made in that section, presence data can also identify pain points in the customer experi-ence, particularly at checkout, or outside a fitting area. Presence analysis can help retailers identify bottlenecks in the customer experience, which can then be rectified for the benefit of all. Micro-location is arguably one of the most prom-ising and yet underutilized of all mobile-related

This section will focus on the four emerging opportunities in mobility for which we currently see the most promise. They are: Micro-location (a subset of location-based services, or LBS), VR integration, AR integration, and AI integration.


technologies available to businesses today, which is why we decided to highlight it in our report. Note that although uniquely suited for the retail space when paired with smart phones, the same beacon and sensor technology can also be ap-plied to an IoT (Internet of Things) setting for use with specialty wearables. This is relevant, for the most part, because as IoT continues to find its way into our day to day environments (retail, homes, schools, hospitals, work spaces, public spaces, vehicles, etc.) the adoption of beacon and sensor technology will naturally follow the same pattern.

Over the course of the next few years, we expect to see a new layer of functionality added to beacon and sensor technology: Identity. Adding identity to traffic data will allow sensors to detect not only that someone is in a particular section of a store, but who that someone is. By combining that individu-al’s visits, time in store and traffic patterns with CRM and social data, retailers will be able to better un-derstand and ultimately better serve that customer. This is not purely a transactional sales and revenue play. The potential here is to use aggregate data to create customized shopping experiences for each visitor that will ultimately increase preference and strengthen loyalty over time, reduce custom-er erosion, increase positive reviews and customer recommendations, and ultimately increase lifetime customer value.

The principal challenge to the identity layer is that in order to be effective, it cannot feel invasive to consumers. This means that it has to be opt-in, or

voluntary. Retailers who are already experimenting with the identity layer have discovered that the key to making it appealing to consumers is to make it not only generally useful but also infuse it with per-sonal relevance; They are customizing the shop-ping experience for each individual customer.

One example of how this works is McDonald’s Netherlands app designed by VMob. Aside from doing most of the things retail apps do, it combines each user’s personal preferences with their current location, time of day, and proximity to their stores to personalize offers and make useful suggestions. The result: 47% increase in average transaction val-ue for users of the app.

What’s interesting about this trend is that while using information like GPS, Wi-Fi data and cell-ID-based learning systems might seem more intuitive to systems designers, replacing cell-ID with an app-based identity - or sign-in - naturally creates a vol-untary opt-in for users.

The same principle can be used with micro-loca-tion and the identity layer: By using a mobile app that combines a shopper’s preferences, either from CRM alone or a combination of CRM and social data, and their current location inside the store, along with their proximity to specific items, retail-ers can combine mobility, IoT, beacon and sen-sor technology, big data, the cloud, and cognitive computing to create valuable, seamless, and per-sonally relevant in-store shopping experiences for each and every customer.


VR integration: One of the most exciting opportunities with mo-bile looking towards 2020 is the integration of Mobile and Virtual Reality (VR). We are already see-ing promising efforts to seamlessly combine both technologies, the most notable entry in this na-scent hybridized category being Samsung’s Gear VR, a collaboration between mobile giant Samsung and VR pioneer Oculus. The concept is simply to allow a smart phone to be turned into a VR display by pairing it with a specially-designed headset.

This practical synergy between mobility and VR technology has the potential address two key ob-stacles to adoption by (a) easing economic access to VR technology and (b) allowing for a greater de-gree of portability for the technology. Making ac-cess to VR technology more affordable and practi-cal should accelerate both mainstream adoption of VR technology and increase mainstream demand for original VR content.

We expect that content producers’ ability to meet market demand for VR-specific content will be the principal driver in VR technology becoming com-petitive in the ecosystem of first, second and third screens. The “First screen” has traditionally referred to television, while “second-screens” have tradition-ally referred to laptops, tablets and mobile devices. Once VR technology adoption and VR content of-

ferings find their momentum, we expect to see the start of a reshuffling of the hierarchy of screens, with hybrid VR pushing mobility nearer “first screen” status in key categories, both established (entertain-ment and gaming) and nascent (virtual training, virtu-al travel, virtual shopping, collaboration, and design).

This brings us to an observation about media frag-mentation, which we believe will be further dis-rupted by mass adoption of VR technology and VR content. Just as print media was disrupted and ulti-mately transformed by the mass adoption of digital media, digital media will be disrupted and ultimate-ly transformed by the mass adoption of VR media, particularly as it pertains to VR-Mobile integration. This ushers in a potent game-change for every cat-egory of content producer, and an opportunity for organizations willing to be first-movers in the space to establish themselves as market leaders.

One particularly important indicator informing this shift is mobile video consumption. As stated earlier, 75% of global data traffic by 2020 will be video, but equally important is the tenfold increase in data con-sumption in just five years). As VR content begins to compete against standard video content, we expect the same forces that continue to make mobile vid-eo such a strong content category for consumers around the globe to drive a similar demand for mo-bile-accessible VR content.


The tradeoff between dedicated VR goggles and the mobile-integration of VR is threefold:

1) Dedicated VR goggles, are equipped with higher end hardware and chipsets not available on mobile devices, resulting in significantly high-er resolution and processing speed than VR-ca-pable phones. The downside is that they must be tethered to a PC.

2) Dedicated VR goggles promise a far superior VR experience than VR-capable phones, but at a much higher price point. (Currently in the $1K-$4K range

for the hardware.) While VR-capable phones do make access to VR content far more economically accessible, the technical requirements of high end VR content and experiences may not be compati-ble with VR-capable phones.

3) Mobile networks will not be fast enough in the short term to support the wireless transfer of high end VR content. High end VR content still requires a wired connection between VR goggles and a de-vice, either a PC or a gaming platform, and we an-ticipate that the transition to wireless VR will take some time.


AR Integration:In regards to the integration of AR with mobility, the future of AR clearly leans towards AR goggle tech-nology like HoloLens, Magic Leap, and Meta. In its immediate future, however, because mobile devic-es are the most widespread interfaces in the world, AR developers will continue to leverage the mobile space to seed key verticals and drive mass adoption.

Some of AR’s most promising uses have already been outlined in this report’s section on virtual-ization, but the general idea is to combine mobile cameras and mobile screens to project virtual ob-jects and content onto live images of real world environments: By turning on their smartphone cameras and looking at their screens, users could be shown layers of virtual content projected onto whatever they point their device at.

This can be applied to any number of applica-tions, from tourism, retail, hospitality, public transportation, vehicle maintenance and repair, healthcare, education and research, advertising, and so on.

One of the companies to watch in this space current-ly is Google. Its innovative Project Tango combines 3D motion-tracking with depth-sensing to create smart layers of connective tissue between hardware (Android smartphones), real world environments, vir-tual environments, and virtual objects. Technologies like Tango are the vehicles through which mobility, AR and VR are quickly becoming integrated.

While the use of special goggles and hands-free interfaces will significantly increase the utility of AR technology, we expect to see mobile devices play an enormous part in the normalization of AR functionality in consumers’ daily lives until such a time as AR goggles and other wearables become mainstream. In the meantime, we expect orga-nizations looking to gain an advantage over their competitors to embrace AR technology and incor-porate it into their business models, both in terms of creating enhanced utility for their customers and in terms of improving internal processes involving a range of activities, from collaboration and data visualization to fleet maintenance and employee training.

AI Integration:To understand the future of AI integration into mo-bile, one only has to look at Siri, Apple’s voice-acti-vated personal assistant. Although still rudimentary and marginally effective, Apple’s innovative effort clearly shows the technology’s potential for mobile users.

AI’s integration with mobile begins with the notion of embedding a personal assistant into a mobile device. This personal assistant needs o be able to capture and process natural language voice com-mands, also respond using natural language, and perform basic tasks relating to search, scheduling, note-taking, calculations, navigation, communica-tions, mobile payments, and so on.

More advanced functions of mobile AI would also involve both the voice-activated and intu-itive automated management of interconnect-ed systems commonly found in smart homes, smart vehicles and smart workplaces, as well as the management of other categories of IoT-based devices like wearables, cameras, sensors, and robots.

The revolutionary utility of mobile AI’s hands-free universal remote control functionality notwith-standing, the real promise of the technology is the combination of natural language interfaces, machine learning, and ubiquitous portability: Not only will phone AI be able to understand and perform increasingly complex tasks whenever prompted by a user’s verbal commands, it will also be able to anticipate the user’s needs based on habits and preferences, and either make sug-gestions to the user or automate routine tasks altogether.

Mobile AI applications will initially range from helping users remember to take their medica-tion (and monitor whether or not they do), to helping them shop for the best online deals, monitor their health, and optimize their sched-ules. Over time, they will evolve into far more complex management and decision-making tasks involving personal medical data, finan-cial data, psychological modeling, and predic-tive modeling. As more and more devices and


systems become connected, mobile AI will be able to both acquire and analyze a greater amount of data on its users, and project itself into an ever growing ecosystem of networks, device and environments to create a seamless layer of AI-supported user-device integration and 360-degree life management.

We currently see the greatest potential for near-term growth focusing on healthcare, re-tail, enterprise collaboration, financial services, and IoT applications, and are especially encour-aged by Google and Facebook’s long-sighted shifts from “mobile first” development to “AI

first” development, particularly in regards to mobile. Google CEO Sundar Pichai indicated as much on parent company Alphabet’s Q1 2016 investor call, in which he discussed the opportunity for AI to turn mobile devices into personal assistants, and the subsequent need to deploy machine learning into mobile envi-ronments in order to make that happen. Face-book CEO Mark Zuckerberg expressed a similar vision at the company’s F8 developer confer-ence, where he also outlined the potential for AI-based chatbots, which would simplify rou-tine and repeatable tasks for users and busi-nesses alike.


Key TakeawaysThe Shift to Mobile First will continue: The most important factor to keep in mind with Mobile technology is that it is the most culturally em-bedded of all of the world’s interactive technol-ogies. By 2020, there will be more active mobile phones in the world than people. Mobile data usage is expected to see an eightfold growth rate between 2015 and 2020. Even putting aside the four opportunities outlined in this report, the ubiquity of Mobile technologies is driving digital-ly mature organizations to shift gears from the Digital First strategy that served them well since the mainstream acceptance of e-Commerce and Digital Social Networks to a Mobile First strategy. This shift isn’t as radical as it may seem. Transi-tioning from Digital to Mobile is simply a natural evolution from a PC-centric experience model to a more practical Mobile-centric experience mod-el. The logic is simple: As digital experiences in-creasingly live on mobile devices rather than PCs and laptops, they must be designed for mobile rather than PCs and laptops.

Omnichannel thinking cannot be divorced from Mobile First: Mobile First doesn’t mean Mobile Only. It just means Mobile First. Experience design in Mobile First organizations may start with mo-bile, but it doesn’t stop there. While Mobile First design thinking may help organizations improve their customer acquisition, development and re-tention efforts, Mobile experiences are far from the only types of experiences that will contribute to their overall success. Even when designing for Mobile First, the entire ecosystem of custom-er experiences must be taken into account and synched, to ensure a predictable, consistent, and wrinkle-free discovery-to-purchase path for con-sumers across every possible touchpoint during their customer journey. It is therefore crucial for companies that shift to a Mobile First experience design focus to also adopt an omnichannel mind-set. The most effective Mobile First strategy can

be undone by poorly executed omnichannel de-sign. For instance, a pleasant Mobile shopping experience can be undone by a poorly managed brick-and-mortar in-store product pickup. Com-panies shifting to Mobile First must always ensure that their entire ecosystem of experiences is prop-erly synched, with Mobile at its center.

Mobile Technologies must be leveraged to design paths of least resistance: The purpose of Mobile First isn’t to complicate business but to improve it. What problem does Mobile First ultimately solve? First, it connects businesses to their customers no matter where they are. Second, it puts that direct connection in their pocket (or their hand) wherever they go. Third, it allows businesses to design paths of least resistance for their customers each time they have a question, want to learn more about a product or service, or decide to purchase a product or service. Eliminating purchasing hurdles is always a net positive for a com-pany, and Mobile technologies help do exactly that. Bear in mind that the same mechanisms that elim-inate purchasing hurdles also help create paths of least resistance for content and communications. By focusing on a Mobile First mindset, organizations can create frictionless methods of communications be-tween themselves and their customers that can im-pact discovery, mindshare, engagement, preference, purchase intent, word-of-mouth recommendations, loyalty, and lifetime customer value. These paths of least resistance also serve to collect data from cus-tomers and better address their needs in real time, to ensure that every marketing touch replaces unwant-ed disruptions with meaningful value.

Mobile First, Omnichannel Thinking, and Build-ing Paths of Least Resistance are the three new pillars of Experience Design: Because Mobile First can only function properly at the center of an omnichannel experience design strategy, and building paths of least resistance lives at the center of all modern experience design, Mobile First, Omnichannel Thinking, and using technol-


ogy to build Paths of Least Resistance are the three pillars that every company engaged in Digital Transformation should base their experi-ence design on. The four technologies outlined in this report help illustrate how new uses for mobile and mobile-related technologies fit into this multilayered approach to forward-thinking experience design.

Microlocation helps convert in-store data into actionable insights that can then be turned into real-time mutually beneficial interactions and ex-periences. Aside from being a Mobile-First strate-gy since it focuses on mobile device interactions, microlocation also fits neatly into omnichannel thinking since it helps leverage mobile technol-ogies to enhance in-store brick and mortar re-tail experiences. Microlocation also helps create paths of least resistance by digitally connecting each customer to the retail environment in order to improve their shopping experience and hope-fully increase the value of each visit.

The integration of AR into mobile experiences can help companies insert enchantment and fun into practical mobile utility for consumers, as well as improve training, ideation, design, diagnostic and maintenance, collaboration, logistics manage-ment, sales, and data visualization for employees. The Mobile First aspect of AR-mobile integration is obvious since the phone serves as the AR inter-face. The omnichannel thinking aspect of that re-lationship relates to how the mobile screen, using the AR layer, helps merge the mobile experience with the physical world, essentially blending vir-tual, mobile, and brick and mortar environments. The paths of least resistance aspect of AR-mobile integration lies in the utility created by the AR lay-er: helping users find their way, helping users learn about products, locations and objects, helping us-ers easily customize or experiment with different variations of menus and products, and so on.

The integration of VR into mobile experiences can also add layers of immersive storytelling and meaningful conceptual experiences to design, engineering, entertainment, education, retail, cus-tomer service, and healthcare. As with AR, the Mo-

bile First aspect of VR-mobile integration relates to the phone serving as the VR interface, in this case, the VR goggle. The omnichannel thinking experi-ence is a little more subtle than with microlocation and AR, once you realize that virtual environments are part of a brand’s ecosystem of experiences, VR simply becomes a new experience landscape. That landscape has to fit into the overall brand ex-perience ecosystem just like traditional websites, mobile apps, and brick and mortar locations. It all has to work together. The paths of least resistance piece relates to how VR content and functionality helps simplify or accelerate a process. Whether that process focuses on teaching a skill, customiz-ing a product, placing an order, diagnosing a prob-lem, fixing a problem, or better understanding data doesn’t matter. As long as mobile-integrated VR is made to serve a purpose, it can be made to create a path of least resistance for a customer, client, vendor, employee or patient.

The integration of AI into mobile experiences is no different. Again, because the mobile device is at the center of the experience itself, mobile AI is a Mobile First strategy. The omnichannel thinking aspect of mobile AI can be applied to its hands-free and virtually limitless uses as a shopping assistant, scheduling manager, bargain hunter, personal ac-countant, fitness trainer and meeting organizer. In regards to building paths of least resistance, mo-bile AI first helps reduce friction between users and their phones by replacing rudimentary manual interfaces like keyboards with a hands-free natu-ral language interface. Because that interface can learn and improve its own performance over time, it can learn to better anticipate a user’s needs, fa-vor certain apps and brands over others, and assist users and companies optimize their relationships with each other based on each user’s preferences.

By focusing on these three dimensions and on hybrid models of technology integration, orga-nizations looking to build innovative mobile-fo-cused programs will find themselves at a distinct advantage compared to companies struggling to connect the dots between “mobile business” and seemingly disconnected technologies like AR, VR, and AI.


Organizations shifting to Mobile First should look towards a possible AI First horizon:

Adopting a Mobile First approach to experience design in the coming years will increasingly mean understanding how to build apps, publish content, and create mobile-specific functionality that will play well with various types of mobile AI. Here’s why: As AI finds its way to Mobile devices and in-creasingly takes on the role of a virtual personal assistant, it will become an intuitive gatekeeper for mobile users, filtering out noise, prioritizing in-bound communications, keeping an eye on offers from their favorite companies, and helping them manage their day.

Organizations should already begin to think about how they will design their products, ser-vices and digital ecosystems for an AI-curated

mobile world. This means understanding how to make sure that their marketing and sales con-tent looks more like signal than noise, how to ensure that important communications are al-ways valuable to the user and adequately timed, and how to help the AI layer easily compart-mentalize communications as actionable items either in terms of scheduling an appointment or reminder, or tying it to a user’s proximity to a physical location. An appointment or re-minder can be anything from the start of a spe-cial sales event to the opening of registration for an online course. Proximity alerts can be GPS-prompted notifications of unused loyalty rewards at nearby stores. This shift also applies to B2B organizations looking for ways to help make sure that clients and vendors are aware of upcoming events, special offers, and important announcements.


SOURCES

Cisco. (2016, February). Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2015-2020. Retrieved May 18 from cisco.com Geohive. (2016). Population of the entire world, yearly, 1950-2100. Retrieved on June 2, 2016 from geohive.com, http://www.geohive.com/earth/his_history3.aspx

Future Research, [email protected]: @futurumxyz

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EMERGING OPPORTUNITIES IN MOBILITY: 2016-2020 · • The number of mobile-connected devices per cap-ita will reach 1.5 by 2020. Based on current popula-tion forecasts, 1.5 mobile