Metrinomics Global Consumer Survey 2010 - Mobile Market
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Metrinomics Global Consumer Survey 2010 - Mobile Market

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White paper on mobile phone usability and its impact on the telecom operators' revenues. The paper highlights major challenges that the telecom business currently faces in the area of mobile handsets, ...

White paper on mobile phone usability and its impact on the telecom operators' revenues. The paper highlights major challenges that the telecom business currently faces in the area of mobile handsets, and provides some practical recommendations on how telecom operators can address them.

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Metrinomics Global Consumer Survey 2010 - Mobile Market Metrinomics Global Consumer Survey 2010 - Mobile Market Presentation Transcript

  • Liberating the subscriber is the new zeitgeistof telecommunicationsMobile phone usability impacts the operators’ revenues.A core problem for mobile operators lies in the architecture of mobile phones. However,the solution has to come from suppliers. Rethinking the customer relationship is the key togrowth in the telecommunications industry.January, 2011 Copyright © 2011 Metrinomics GmbH. All rights reserved.
  • 1. Introduction If there is one problem with the traditional business models of mobile operators, it is ARPU (Average Revenue Per User). Even though mobile operators continuously upgrade their networks, and the technologies have been around for some years already, they have never been able to generate ARPU growth as expected. The growth has actually come from external players who are now making mobile networks their playground, in a way that operators have not been able to. This has led to some questioning of the industry, which will be addressed in this report. The main issue is why mobile operators were unable to lead the development in data-usage themselves, despite so much effort?Copyright © 2011 Metrinomics GmbH. All rights reserved. | 2
  • 2. Why mobile operators failed to grow ARPU relation to subscribers. The marketsufficiently penetration of handset technologies is critical. The mobile handset is the windowOur data allows us to compare mobile phones on the network, the means by which theand mobile service providers, with the various subscriber can take advantage of it. But theother products and services that consumers weak point for the network operator is thatuse (see page 11). whatever does not appear on or through the handset does not de-facto exist for theMobile operators have a very specific view of subscriber. The possibilities of the networktheir business. Their subscribers don’t play are, in the end, dependant on the usabilityas prominent a role in their strategies as the of the handset. If a subscriber is unable tocustomers of other products and services access new features on his handset, thendo in their markets. Mobile operators are those features are irrelevant to him andmuch more interested in strategic issues result in no usage income for the networkwhich don’t involve their subscribers. The operator. Therefore, when prices fell andfact that revenues are generated only by their the number of features increased, ARPUsubscribers tends to be lost along the way. remained lower than it should have been.Focus on growth Handset manufacturer strategyMobile operators tend to focus only on growth, Critical to this is the fact that handsetand achieving that in a rising market comes too manufacturers sell, above all, to operatorseasily. However they failed to develop a more and not to consumers. It’s hard to imagine,secure, deeper relationship with subscribers. but as a result some handset manufacturersTherefore, subscribers are still distant from have never tested a new phone amongthe operators, a faceless mass, even though end-users. In fact they have no real needoperators like to think that they ‘own’ them in a to do so as it’s more important to them toway. equip phones with all the features that they want to offer, and that the infrastructureHandsets are the centre of the relationship supplier has sold to them and implemented. That closes the circle of self-fulfillingMobile handsets and handset strategy have reasoning that characterises the operators’also had a major impact on the operators’ technology policies. Copyright © 2011 Metrinomics GmbH. All rights reserved. | 3
  • Feature hype The only testing of mobile handsets seems to be carried out in laboratories. If you browse through catalogues of mobile handsets, you will find various tables showing the different features available on each handset. Technically speaking, most mobile handsets are as advanced as they possibly can be at any point in time. But there is a vast difference between capability and usability. Some phones often feel like they are designed only with a telecom engineer in mind. So, trying to guess how, for example, a pull-down menu is organised on many mobile phones, is often a source of frustration.Copyright © 2011 Metrinomics GmbH. All rights reserved. | 4
  • 3. The Metrinomics Global Consumer survey - Fig. 1: Global Consumer panel coverage Probing the victims63% of the world’s GDP and 55% of the world’s mobile phone users In order to better understand the implications of these two issues, we have analysed feedback on the day-to-day experience of 15,000 mobile phone users across the world, as part of our Global Consumer survey. We believe there is a great clarity to be achieved by looking at the networks through the eyes of the mobile phone user. The Metrinomics Global Consumer panel is regularly surveyed and includes consumers from 11 countries worldwide, representing the majority of global GDP . This panel rates a wide range of products, across all industry sectors, and as a result Metrinomics generates an unrivalled set of data and can offer a unique way of analysing the drivers of market success. Copyright © 2011 Metrinomics GmbH. All rights reserved. | 5
  • 4. A mobile phone used to improve your image Fig. 2: The Master/Slave Index but can now make you look foolish or trapped Drill Technology is there to serve individuals and iPhone society. However, when the average person finds a piece of technology is not intuitive Entertainment console enough, and forces him or her to follow it, All-in-one device rather than the other way around, then the (scanner, printer, etc.) user has lost his or her position of control. Online game You can be the master, you can be the slave Our Global Consumer data is used to Stereo system derive insight indices, including the Master/Slave Index which shows, for every High-end phone product category, to what extent the user Mobile phone is in a position of control. A positive index score represents control (a master) and a Middle-class phone negative index that the user lacks control (a slave). Low-end phone So, on which side of the master/slave divide would you like a product to be for Slave (consumer feels he lacks control) (consumer feels he is in control) Master yourself? On which side of the divide are mobile phones? Mid-pointSource: Global Consumer survey 2010. Representative sample of approx. 11,000 consumers across 11 countries. From the user perspective, the average mobile phone has a negative Master/Slave Index. This is the complete opposite to a decade ago. Despite, or even because of, all the advances Sending an MMS, on the face of it, looks as easy as sending an SMS, right? made by mobile phones since Well, after a struggle, you might locate the MMS function, then you go through then, they are still considered the whole process of choosing the recipient, and attaching the picture, only to difficult to use on average. get a message 10 minutes later that the MMS was unable to go through. Copyright © 2011 Metrinomics GmbH. All rights reserved. | 6
  • 5. Mobile phones no longer make life easier However, even though the mobile phone has been continuously developing, its Anything that makes our lives easier is always basic functions are no longer perceived to welcome. The mobile phone was one such enhance our lives. Most people have their device when first introduced on the market. own mobile phone today, so the perception The new-found freedom that mobile phone about how easy the mobile phone makes users experienced in those early days was our lives is not as clear as in the past. And almost revolutionary. in fact the opposite perception takes hold. As manufacturers add on more and more features, users find it increasingly more difficult to master their handsets, and the Fig. 3: Ease of life index associated ease of life declines. It gets to the point where one eventually becomes a ‘hostage’ to the device. iPhone 85.9% Laptop 83.7% According to the Global Consumer survey, All-in-one device there is a whole range of product categories(scanner/printer/copier) 82.6% that make life easier than the mobile phone, Drill 81.6% from the internet browser to Navigation GPS, the drill, and all-in-one. Stereo system 77.4% Why do complex new products and services, Mobile phone 76.4% like internet browsers and online shops, Entertainment console 73.3% make our lives easier, but mobile phones do not? And the answer to that comes back to the fact that mobile phones are designed to please the operator in the first respect, and 60 77.5 80 100 not the end-user. Average Nevertheless, the iPhone has emerged toSource: Global Consumer survey 2010. Representative sample of turn the perceptions of mobile phones on itsapprox. 11,000 consumers across 11 countries. head. The iPhone has an ‘Ease of Life’ index that is second only to the internet browser. Copyright © 2011 Metrinomics GmbH. All rights reserved. | 7
  • Fig. 4: Frequent Usage (% of a device’s users who uses it twice a day or more often) 6. The iPhone comes to the rescue The launch of the iPhone was a milestone in the history of the mobile phone industry. iPhone It restored a certain magic to the mobile Smartphone phone market through its radical design 89.9% High-end that put the user first, leading the user 80.1% phone Mobile phone Middle-class smoothly through all his mobile phone 70.7% phone “events”. The iPhone has made the mobile 66.3% 61.6% Low-end phone easier and more fun to use than phone ever before. 44.9% ‘Fascination’, which was lacking in the mobile phone market for most of the last decade, was restored by the iPhone. And ARPU is driven by this ‘fascination’, which Fig. 5: Fascination Index is a combination of IT, lifestyle, internet, and content. iPhone 65.7% No single device has the ability to drive up Laptop 55.7% ARPU like the iPhone. In the USA, during the first quarter of 2009, the average Entertainment console 53.5% iPhone user gave AT&T about $95 a month compared to $59 for the average post-paid Stereo system 51.1% AT&T customer1. Mobile phone 48.4% All-in-one device Our survey shows that the frequency of (scanner/printer/copier) 43.4% usage of the iPhone and the variety of 39.1% different features and applications used by Drill iPhone owners, is unmatched by any other mobile device. Almost all iPhone owners 30 40 50 60 70 80 use the device many times a day. 48.5 1 Gigaom.com Why AT&T Is Desperately Addicted to the iPhone, Malik, Om, April 22, 2009 AverageSource: Global Consumer survey 2010. Representative sample of approx. 11,000 consumers across 11 countries. Copyright © 2011 Metrinomics GmbH. All rights reserved. | 8
  • The iPhone is more than a phone because Fig. 6: Mobile phones - most commonly used features it connects users to their everyday life. Mobile phone iPhone The window onto the network The mobile handset is a window onto the Other*: 9.5% Camera: 12.5% network. It is the technology that enables Camera: 18% Other*: 15.2% our entry into different data worlds with SMS: 4.3% all the possible services that entails. We, Games: 8.6% SMS: 6.6% Organiser:10.6% as the end-consumers, are the ones who remunerate the operators for helping Organiser:14.4% Games: 8.4% to ease our lives. But it is the handset E-mail: 8.8% Music: 11.4% that makes all that revenue generation possible. E-mail: 13.2% Data transfer: 7.9%Internet/WAP: Music: 14.2% Apple is finally turning the mobile 9.7% Data transfer: 12.5% telecommunication industry into a success, Internet/WAP: 14.2% becoming the most significant ARPU driver.*Other: Alarm, MP3 Player, Radio, MMS and Mobile TV But why Apple, and not Sony- Ericsson,Source: Global Consumer survey 2010. Representative sample of approx. 11,000 consumers across 11 countries. Nokia, Motorola, or Samsung? Why not the big operators like Vodafone, Telefonica, America Móvil, T-Mobile, or China Mobile? The answers to this and to where ARPU is The iPhone acts more as an access point to the web than other mobile phones. A typical iPhone user in the US (based going will determine the future of the whole on billings analysis), consumes 273 MBs of data per month as compared with 54 MBs for Blackberry users and 150 telecommunications industry. MBs for Android and other users in the U.S1. and the main downstream protocols for mobile networks include HTTP , YouTube, Bit Torrent, Windows Update, and Web 2.0.such as MySpace and Facebook2 . Apps have also made a huge impact with iPhone users to the extent that all other phone manufacturers have created their own app stores. Apps are a unique way to personalise one’s iPhone and have proved so popular that there are apparently over 22,000 individual apps available for the iPhone. 1 CNN.com, How data caps help RIM, hurt Apple, Philip Elmer-DeWitt , June 14, 2010 2 Understanding your Mobile Network, Sandvine.com, 2009 Copyright © 2011 Metrinomics GmbH. All rights reserved. | 9
  • 7. The subsidy trap Consumers have never been at the centre of mobile phone development, because the majority of phones are manufactured for sale to the mobile operator. Then the operator passes the phones on to the consumer, in the form of bundled sales i.e. subsidised handsets in exchange for locking themselves into a contract. So the consumer, to a certain extent, was only an after-thought for operators and handset suppliers. It is no wonder then, that manufacturers have a certain distance to the end-user way of thinking and behaving. The result is that manufacturers supply devices that fulfil their promise of offering newer and better technology. That is good for the operator. But manufacturers are unable or unwilling to provide interfaces and design that allow the user to take control of this technology.Copyright © 2011 Metrinomics GmbH. All rights reserved. | 10
  • 8. Customer satisfaction with mobile devices This lack of connection with the consumer is reflected in the decline in customer satisfaction with mobile phones over the last 10 years. Once the initial fascination with the mobile phone wore off, customers began to find that their mobile device, although technologically advanced, was Fig. 7: Customer satisfaction with a range of product/service categories not designed to meet their needs. Average High levels of market growth and poor 50th mobile operator strategy meant that customer issues were not addressed and satisfaction levels gradually fell off. This decline in satisfaction was not only with the handsets themselves, but also with the operators. Mobile operators nowadays are rated as having among the lowest customer satisfaction and loyalty. 1st 2nd 8th 12th 23rd 52nd 62nd 83rd 93rd 101st iPhone Anti-virus Home Entertainment Stereo Mobile Browser DVD Mobile Public software cinema console system phone recorder provider services system Ranking on satisfaction (based on all product categories)Source: Global Consumer survey 2010. Representative sample of approx. 11,000 consumers across 11 countries. Copyright © 2011 Metrinomics GmbH. All rights reserved. | 11
  • In contrast, the satisfaction levels of the Fig. 8: User satisfaction with mobile phones over time iPhone represent the point where the mobile phone industry, as a whole, could have been. The resulting gap represents the opportunity that the industry has 85 missed out on in the last decade. 84 iPhone Mobile phones missed opportunity 80 Mobile phones Other mobile phones 76 72Source: Global Consumer survey 2010. Representative sample of approx. 11,000 consumers across 11 countries. Copyright © 2011 Metrinomics GmbH. All rights reserved. | 12
  • 9. What should operators learn from this? databases? Or will it rather be used to our disadvantage? How likely is it that suchOperators have begun to understand what data privacy issues will put the spotlightit takes to keep up with the likes of Apple on operators, forcing them to justify theirand Google. Some are setting up their own practices?shop fronts, app store, or community. Manyothers have accepted the consequence of So, operators again run the risk of losingstrategically shifting to become the ‘owners’ out on large parts of their businessof the network, subscribers, and the “last potential. The reasons are the same asmile” to the individual subscriber. before: the operators’ relationship to their customers and subscribers; the total lackFor most operators, the ‘intelligent pipe’ of customer orientation.business model offers them a strong position.With all the subscriber data available, there If operators want to retain and groware many opportunities to profit from this their mobile business revenues, theyknowledge. But that attitude tends to see the urgently need to turn their attention to theirend-users as little more than a commodity. For customers. Be cool, be friendly, be helpful,many subscribers, this feels like they are being and make customers’ lives nice and easy.exploited once again. Operators claim that their That is what operators are there for - to‘intelligent pipe’ solutions will provide customers protect their customers and enable them.only with the content and services that he or she They must do it now and radically.has a preference for. So, customers will reactby choosing the operator that best understands Otherwise the future of operators will bethem and rejecting the others. simply as regional suppliers of ‘dumb pipes’.Operator policies still remain somewhatsuspicious to the subscriber. The mobiletelecommunication industry does not havethe best reputation among consumers due topoor service perceptions, unfulfilled promises,and various disputes. Will it benefit us ifoperators track our personal profiles in their Copyright © 2011 Metrinomics GmbH. All rights reserved. | 13
  • 10. What should suppliers learn? Infrastructure suppliers have to support the operators in their attempts to take advantage of their intelligent pipe model and also to put the customer first. Their architecture solutions need to tackle mobile capacity broadband issues but also provide the operator with technical solutions to deliver new applications as efficiently and effectively as possible. They can help operators capitalise on areas in which they have an advantage such as mobility applications and secure services like financial services. Good customer experience could be the difference between success and failure for mobile operators in the search for new revenue models. Mobile devices are increasingly feature-rich, using different access technologies and many mobile terminal applications. The consumer is getting lost in the complexity. It is even difficult for the operators to ensure all applications work correctly and that the latest software version is on all devices. But if an application does work unreliably or fails for any of those reasons, then the customer satisfaction will fall. Infrastructure suppliers have a key role in helping the mobile operator overcome these issues and ensure a smooth and positive customer experience.Copyright © 2011 Metrinomics GmbH. All rights reserved. | 14
  • Metrinomics is a market strategy company with a focus on global B2B markets. We help companies position themselves in relation to customers, as their main source of revenues. Metrinomics provides a comprehensive portfolio of business optimization services based on customer feedback and market research techniques. We see our task as tracking the conditions for market success into the future, enabling our clients to explore and leverage their business potential. Metrinomics‘ focus industries include telecommunications, fund management, logistics and consumer products. Schlesische Str. 26 D-10997 Berlin – Germany Tel: +49/30 - 69 51 71 - 0 Fax: +49/30 - 69 51 71 - 33 E-Mail: info@metrinomics.com http://metrinomics.comCopyright © 2011 Metrinomics GmbH. All rights reserved. | 15