June 9, 2016
Mobile technology has played a major role in driving innovation across industries. The ability of businesses to connect with their clients whenever and wherever they are is a powerful driver of customer loyalty and engagement.
Moreover, mobile-first solutions have demonstrated an outstanding success and opened up opportunities to conduct business in a more efficient manner by refocusing efforts from physical to digital experience.
E-commerce was especially affected by the growth of mobile engagement. In fact, research published by Google in April suggests mobile shopping-related searches increased 120% in the last year. For retailers, it means that mobile is the channel to increase foot traffic and sales in physical stores. Smartphones have almost become the extensions of our hands as we reach for them for any question related to shopping or otherwise.
In the future, mobile will become even more important and completely transform the way business is conducted. This is supported by the estimation that the total mobile data traffic is expected to rise at a CAGR of around 45% by 2021, according to the mobility report published in June 2016 by Ericsson.
Data suggests that two main factors will play a major role in mobile data traffic growth — the rising number of smartphone subscriptions (in particular for LTE smartphones) and the increasing amount of data consumption per subscriber.
According to the report, North America is the region in the world with the highest monthly data usage per active smartphone subscription. In fact, by 2021, monthly smartphone data usage per active subscription in North America (22 GB) is expected to be 1.2x higher than in Western Europe (18 GB) and 3x that of Asia-Pacific (7 GB).
Between 2015 and 2021, Western Europe is expected to witness a 9x growth in monthly smartphone data usage per user. However, due to the growth in the number of subscriptions, the APAC region is estimated to have the largest share of total smartphone traffic in 2021.
North America and Western Europe currently have a larger share of total traffic volume than their subscription numbers imply. This is due to the high penetration of high-end user devices and well-built WCDMA and LTE networks with affordable packages of large data volumes. This leads to higher data usage per subscription.
The APAC region will be able to reach the largest share of mobile data traffic in 2021 due to it being the most populous region and a rapid growth in subscriptions. China alone will add 210 million mobile subscriptions between the end of 2015 and 2021.
However, the APAC region is quite diverse and is represented by countries with varying levels of maturity and diversity of the mobile broadband market.
In less developed countries, GSM is still the dominant technology. In addition to insufficient network quality and the cost of data subscriptions, it creates barriers to higher mobile data consumption.
A 13-fold increase in mobile data traffic by 2021 is expected in Central Europe, Middle East and Africa. The main factors to drive the growth are believed to be strong growth in smartphone subscriptions and demand for data-intensive applications like video.