[The landscape of idle screen (aka home screen) solutions has changed considerably in 2007-2009. How will it look over the next two years? Research Director Andreas Constantinou looks at the trends in the active idle screen market and tries to answer the perennial question: who will own the screen ?]
We recently published a report on the Active Idle Screen market (available
here) as part of our Atlas research; in this post I ‘ll highlight some of the most interesting conclusions.
The market of idle screen (aka home screen or phonetop) solutions has grown considerably; in 2002-2006 it was kick-started by active idle screen (AIS) vendors like Abaxia, Cibenix and Celltick and tier-1 operators like Orange; in 2007-2009 it has been capitalised by Apple, HTC, Samsung, LG and increasingly Nokia, Android and Windows Mobile; In 2010-2011 we believe that the idle screen will be elevated into precious real-estate divided across the handset OEM, operator and service providers, led by Nokia.
The role of AIS vendors in an evolving market Today active idle screen (AIS) solutions are available from Abaxia, ACCESS, Celltick, Cibenix, Insprit, Nuance, and SurfKitchen. mPortal, PointUI and SPB Software have also built custom AIS solutions.
The active idle screen market can easily be dismissed as a rapidly shrinking one; idle screen customisation technology is becoming a commodity platform feature while handset OEMs are moving in to claim that same territory. But that would be rushing into conclusions.
AIS vendors act as the commercial matchmakers across the disparate camps of network operators and mobile handset manufacturers; operators will always be looking to go a step further in differentiating on the most premium real estate on the handset, i.e. beyond what is available out of the box. For example, some AIS vendors are starting to offer post-sales idle screen management that is not yet available by OEMs.
Moreover, as global operators manage regional device customisation requirements more centrally, so the need for AIS vendors will increase as the one-stop agent between the operator group and the manufacturers.
European Tier-1 operators like Orange, T-Mobile and Vodafone are developing or have already developed 100-200 people internal software development teams, but we don’t see this as denting the demand for AIS solutions much; operator know-how on successfully delivering software solutions across OEMs is still painfully scarse and their learning curve is slow.
Naturally, AIS vendors will also have to morph and adapt in response to the times. Revenue models are shifting clearly away from per-unit royalties for all pre-load software (i.e. embedded in ROM before the handset is shipped). Software vendors, including AIS vendors will have to follow suit. As such, the more successful AIS solutions will be those that monetise through per-active-user or per inventory (primarily CPA or time-based) revenue models, which are better aligned with the interests of operators and ad publishers.
In order to extract value during the post-sales phase, AIS vendors will have to add value in service delivery, service update, user profiling or targeting; here the fundamental premise holds: you can only extract value where you add value.
Moreover, AIS vendors will have to move away from selling platform enablers to offering vertical solutions, managed and hosted on behalf of the operator. Such vertical solutions can be built around innovative applications like ‘signature’ user interactions, intelligent search, service storefronts, phonebook 2.0, inventory analytics, and the idle screen as a ‘feudal system’.
I ‘ll next discuss these key applications that we believe will be hitting idle screens from 2009.
Key applications: innovation on the idle screen During the last few years we have seen the idle screen function as a launchpad for device functionality, service discovery, advertising and contacts search. Such product features are now becoming commonplace amongst AIS vendor offerings. As technology is becoming less of a differentiating characteristic, we are seeing many new innovative applications surface.
Signature interaction paradigms: the increase of handset functionality and applications put unhealthy demands on the idle screen for information compression. How can you cram 100s of features on a screen 2.4 x 4.5 inches? Answer: by innovating with new user interaction paradigms. We have seen user interaction paradigms evolve from soft key, to 4-way navigation, to gesture-based navigation with the Apple iPhone and Palm Pre. Interaction paradigms are particularly important when navigating dense information and this is where we believe there is considerable demand for innovation on the idle screen.
Clever interaction paradigms involving sensors (e.g. accelerometer, compass and tilt sensors) will help in two important ways; firstly by adding multiple dimensions to the otherwise 2-dimensional idle screen; and secondly by allowing OEMs and operators to create differentiating and potentially exclusive user interaction paradigms. This will be an area of intense research in the next 5 years.
Service storefront: The icon grid is becoming the de facto user interaction paradigm for both smartphones and feature phones. Placed on the idle-screen this icon grid paradigm is ideally suited for discovering and accessing new services; a paradigm lovingly associated with widgets.
We believe that the icon grid paradigm will be increasingly used to implement service storefronts, where each operator service is associated with a icon that links to a web or WAP service or even displays service status as part of the same icon. The service store will revolutionise service discovery and delivery – think of the 100s of services today available via USSD, premium SMS and WAP that can tomorrow be exposed as icons or widgets. It will also allow service updates to be reflected on the service store much like the number of unread messages shows up on a Facebook iPhone icon; this should allow service usage to be extended way beyond the famous honeymoon period.
Intelligent search: The idle screen is the starting point for all user journeys; it is therefore natural for the idle screen to provide shortcuts into functionality that is used most frequently, such as search – whether it is for contacts, voicemail summaries, free minutes remaining, where’s-my-nearest, what’s my Facebook status and many more creative search scenarios. We believe that the idle screen is ideally placed to aggregate all such information from third party sources in the internet cloud, the network and the device.
Phonebook 2.0: as the starting point of every user journey, the idle-screen is also the pivotal point for placing the phonebook. We therefore see the idle screen merging in phonebook 2.0 functionality, i.e. integrating not only contacts, but also their location, presence and social networking status. Already, predictive phone book search from the idle screen is becoming commonplace in smartphones such as Nokia E-series and Windows Mobile devices but also feature phones such as Sony Ericsson K, W and C series models. The transition to phonebook 2.0 is the logical next step.
Inventory analytics: it is well known that the idle screen is the most valuable real estate for ad inventory. What is less known is that as the starting point for each user task, the idle screen can track the beginning and end of every user journey, whether it is browsing a web site, looking up a contact, making a call or sending a text message. As such, the idle screen is the pivotal point for capturing usage analytics and therefore attaching richer profiling and segmentation information to the inventory. This implies a boost for the CPCs and CPAs on the idle screen,which are already at the highest valuation across the handset.
The idle screen as a feudal system: Up until the Middle Ages, the land tenure and political structure in Europe was build around the concept of feuds; pieces of land owned and maintained independently. The idle screen has traditionally been a piece of real-estate that is near-impossible to divide up for the lack of a standard measurement unit; it is common for handset OEMs and operators to hold months-long disputes on the placement of this service or that Start button on the idle screen.
Interestingly, the icon grid paradigm, popularised in the notion of widgets, can be used to divide the real estate of the idle screen into distinct areas owned by different parties (OEMs and operators), much like land is divided up in a feudal system.
Such a paradigm is made possible thanks to a new standard unit of measurement – a single icon – for dividing idle screen real-estate. We are seeing idle screen solutions such as Nokia’s Home Screen adopt this approach.
More importantly this will lead to innovative revenue models where the idle screen real estate can be leased or sold by impression, length of time or active usage. This will allow handset OEMs to trade ‘land’ for a higher handset wholesale price, for a per-icon/per-month lease or a revenue share off operator services.
Who will own the screen? And so we come to the perennial question: who will own the idle screen?
Following DoCoMo, SKT, Orange and Vodafone we see all European Tier-1 operators issue RFIs for idle screen solutions, expanding to tier-1 operators in Latin America and the Middle East. These Tier-1 operators will want to leverage their purchasing power to deliver differentiation and accelerated service discovery on the idle screen.
Tier-2 and Tier-3 operators will also be opting to customise the idle screen, thanks to variant management (off-the-shelf device customisation) options available by the OEM, starting with Nokia’s S60, Series 40 and Android devices. The big winner at the end of the day will be the user. A clear trend appearing is the move away from operator-centric customisation to user-centric personalisation. The idle screen will be no exception, where we see the widget paradigms favour user personalisation.
In the long run, the idle screen, much like the customer’s wallet, will not be owned by any single party, but shared. In this economy, best placed are those who provide the technology platform and commercial brokering for service delivery on the idle screen and leasing of real-estate among multiple parties.
What’s more, ownership and leasing will not be just about pre-load deals, but about post-sales management of the idle screen. We argue that, what will be important is owning the in-the-hands experience, not the out-of-the-box experience. It is the post-sales idle screen management where sustainable value and revenue will be coming from.
Long term, we envisage that ownership of the idle screen will become as elementary as customer ownership; as ubiquitous as handset branding; and as important a monetisation tool as handset accessories.
Comments welcome as always.
– Andreas
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