* a continued economic downturn during 2009 may buffet the fortunes of smart phones. While sales growth for all mobile phones may decline to around
4 percent, smart phone growth could fall by more than 15 percentage points, to under 20 percent4. Smart phones’ market share may increase by no more than
2 percentage points
* The most important challenge for mobile phone manufacturers is to show how their smart phone products can provide a superior return on investment compared with their competitors, even if they have a higher list price, and require a higher subsidy. Manufacturers may need to argue the case for their products not just with operators, but also their shareholders.
* Smart phone manufacturers could sell their devices as price-competitive replacements for laptops. For some workers a smart phone may address all
their communications, connectivity and applications requirements.
* For telecommunications operators to be able to face up to their competition, they may need an equivalent understanding of their customer bases:
otherwise their role may be reduced to that of wholesaler, a change that would likely imply much lower revenues per subscriber.
* Accurate information may be essential to enable an operator to transform from being regarded as best for the latest technology, to best for value. Information is also likely to be vital in supporting diversification into other areas, such as IPTV and managed services.
* Better customer information may also help operators respond more quickly to rapidly emerging phenomena such as social networking and online video sharing. It could also enable operators to capitalize on such developments, rather than be sidestepped by them.
* Operators should appoint CIOs with care. The CIO should be able to collect and analyze customer data and make it relevant to strategy, innovation and
operations.
* Regulators should monitor operators’ activities closely. Open dialog with operators may be essential, along with clear guidelines about acceptable
and unacceptable practices.
* During 2009, on average office workers are expected to check their inboxes more than 50 times and send more than 160 messages daily, in all dedicating up to two hours each day to email.
* For some, 2009 will be the year in which their volume of emails sent, received and saved, finally falls. In some respects this will be a response to internal mandate: it has been estimated that every employee creates 20 megabytes, every day27. Heavier users may find their inboxes forcibly emptied by IT departments, to control costs.
* In a few cases, users may resort to ‘email bankruptcy’, that is deleting everything in their inboxes and starting over.
* It is in the interests of telecommunications and technology companies to advise organizations on how to preserve the power of digital communications. A phone call to a single individual may be the most efficient and effective response to a group email. A short text message could replace a lengthy phone call.
* In 2009, mobile phone users are expected to download over 10 billion applications to their mobile phones.The majority of applications are likely to be sourced from sites managed by mobile device manufacturers,consumer electronics firms and software houses.
* Although a few operators may launch their own application stores38, the majority are likely to see no alternative to allowing their customers to access third parties’ stores.
* Operators are not likely to earn any direct revenue from application downloads. Any subscription or license income is likely to be shared between the application store and the application’s authors.
* Customers on flat-rate mobile data subscriptions are expected to generate additional revenues from application usage only if resultant traffic volumes are so high that usage caps are breached and additional charges are levied. But these cases are likely to be exceptional.
* However, as consumer awareness of mobile applications increases, the number of voice subscribers that add data subscriptions may well rise, boosting
revenues.
* Not all customers will want to commit to a data subscription. But this may be even better news, if previously voice-only customers start to purchase data on an ad-hoc basis and download occasional applications. Ad-hoc usage is typically billed by the megabyte and may be more profitable for operators
than ‘all-you-can-eat’ monthly tariffs.
* Operators could generate revenues, in addition to data charges, from services offered to third-party stores. For example, charging application purchases to subscribers’ phone bills could streamline the payment process. Credit card payment may be offputting to some potential customers, and processing
charges for retailers can be high. Operators may also be able to earn revenues from developers and consumers by adding presence and location sensitivity to services.
* Camera phones boasting high-quality lenses and 12 mega-pixel sensors are expected to offer image quality that rivals the best point-and-shoot cameras
A few may include features common only to expensive dedicated cameras, including near-zero shutter lag, smile recognition and 360-degree panoramic
capabilities.
* But the most successful phones are likely to use the power of mobile connectivity to enhance the stills camera: using GPS to allow geo-tagging of images; high-speed broadband to post photos online, and email clients for sending photos to friends.
* The same will likely be true of music phones. A growing range of devices may have multi-gigabyte memory, dedicated music buttons and high-quality pre-amplifiers that rival standalone players. And music and mobility will be more carefully fused. Music phones may incorporate mobile broadband to enable rapid downloading over-the-air; FM transmitters to play music in cars or on hi-fis, and WiFi connections to exchange music with PCs.
* sales of mobile camera phones during 2009 may exceed those of dedicated digital cameras,for the first time ever. And by year-end, camera
phones will likely outnumber all the conventional digital and analog cameras ever sold. Sales of music phones may be as much as three times higher than those of dedicated players, and whereas MP3 functionality was rarely used in older phones, in 2009 models, usage may exceed 60 percent.
* Operators should study consumers’ use of converged products in detail. Tools now exist that can monitor usage of all mobile phone functions, not
just those that require a network connection. These could offer far greater detail on consumer behavior, and may help identify revenue opportunities
relating to converged functionality.
* Farewell mobile phone, welcome the wireless device
* Mobile operators should consider their positioning. They should determine whether to remain focused on the provision of long-range cellular mobile
standards, or whether to become aggregators of multiple wireless standards. Operators should also understand how they can monetize the proliferation of wireless technology, particularly if they are subsidizing its inclusion in the phones offered to their customers. Operators should consider how to route customers’ data traffic, particularly large files, so as to minimize carriage costs.
* If demand for mobile broadband remains strong, the resultant stress on networks, particularly backhaul connections, could be severe64. A typical mobile
network backhaul connection is 2MBit/s for a leased line: mobile broadband services have advertised maximum speeds of up to 7.2MBit/s. To bridge this
gap, and increase capacity to accommodate the growing number of users, operators may collectively have to spend tens of billions of dollars65. Backhaul
typically represents 30 percent of a mobile operator’s operating costs and, worldwide, operators spend an estimated $20 billion per annum on leased lines
alone.
* In light of these costs, and the proliferation of all-youcan-eat data tariffs, operators may face a similar fate to fixed broadband providers: an inability to monetize rapidly growing data volume. Data now exceeds voice volume on some mobile networks68, and with data traffic growing by several hundred percent on others, the cost of carrying data traffic could rapidly erode margins. A single mobile broadband user can consume as much capacity as 1,000 voice callers – yet the implied revenue that data traffic generates is between a fraction of a cent and two cents a megabyte, whereas
voice is charged at the equivalent of around 60 cents per megabyte.
* In countries with the highest levels of mobile broadband penetration, operators may encounter a subsequent, expensive choke point in the radio-access
network, possibly requiring the purchase of more spectrum.
* As mobile broadband penetration rises, mobile operators are likely to have to balance customer satisfaction, diversification, profits and investment
levels with the management of traffic loads.
* Either way, operators should focus marketing attention on managing customer expectations. The gap between advertised maximum and achieved speeds may well grow in the short term. Operators should be wary of one of the emerging consequences of overpromising and underdelivering: litigation.
* Operators should examine the business model for mobile broadband carefully. Given that network capital and operating expenditures are likely to have to rise, retail offerings based on subsidized PCs and all-you-can-eat tariffs may not be sustainable in the longer term. Evidence from the voice market suggests that consumers are reasonably happy to pay a premium in return for the convenience of mobility.
* Operators should develop software to ensure that devices automatically select the best connection available per application. Cellular networks remain fine for voice, but should remain the bandwidth of last resort for heavy data applications.
* Essentially, mobile television may simply no longer receive the benefit of the doubt. In 2009, therefore, five times more mobile television services may be closed than those launched. Subscriber numbers may fail to reach even the bottom range of analysts’ forecasts: mobile television’s total global audience may fall short of 30 million.
* Fee-based services, such as those offered by many European operators, may fail to gain traction, and so beclosed down. Advertising-funded services, such as those in South Korea and Japan, may continue to endure disappointing levels of adoption and usage, and might fail to break even.
* Mobile may be unsuitable for viewing television programs, but it is potentially an ideal medium for enhancing consumers’ terrestrial television experience. Mobile telephony could provide an efficient payment mechanism for VOD – delivered to the set top box at home – particularly for smaller VOD players. Mobile phones can also be used to control the DVR. Television broadcasters can use mobile as part of their CRM strategies. Individuals could be sent reminders of the start of a new series of a favorite program, or be informed of the launch of a major new box-set. And the mobile phone has been well used as a means of voting on the outcome of some television programs.
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