THE FUTUREOF MOBILEMOBILE WORLD CONGRESS 2012www.analysysmason.com
Copyright © 2012. The information contained herein is the property of Analysys Mason Limited and is providedon condition t...
ContentsIntroduction                                                                                           5Thinking a...
4
WeLCoMe - to AnALYsYs MAson’sVIeW oF tHe FUtURe oF MoBILeAnalysys Mason is proud to present our latest insights on the mos...
tHInKIng And doIngWhat we offerKnowing what’s going on is one thing. Understanding how to take advantageof events is quite ...
Consulting                                                              ResearchOur skill set is broad. It has to be. Our ...
seRVICes And stRAtegIes                                 The collapse in the value of the mobile gigabyte:                 ...
“The structure of mobile data traffic in most European countries and on the majority                                      ...
seRVICes And stRAtegIes                                   Service provider success with M2M: the five ‘Ps’ steVe HILton Pr...
Service	providers	that	              “Service providers that address the five Ps of M2M will better align their growing   ...
seRVICes And stRAtegIes                                  The challenge of marketing 4G when 46% of iPhone 4               ...
“Games for mobile devices will increasingly include an online element, as they have                                       ...
seRVICes And stRAtegIes                                     The home will be the centre stage of mobile innovation        ...
“Leading smartphone OS companies that also have strong interests in the TV                                                ...
seRVICes And stRAtegIes                                       Mobile loyalty schemes: much more than a good price HeLen KA...
“Analysys Mason has previously categorised loyalty schemes into three broad types                                         ...
seRVICes And stRAtegIes                                 Focus should be the watchword for operator-provided               ...
“Large companies that offer cloud services are often doing so in spite of generating                                      ...
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
Futur of Mobile - by Analysis Mason
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  1. 1. THE FUTUREOF MOBILEMOBILE WORLD CONGRESS 2012www.analysysmason.com
  2. 2. Copyright © 2012. The information contained herein is the property of Analysys Mason Limited and is providedon condition that it will not be reproduced, copied, lent or disclosed, directly or indirectly, nor used for anypurpose other than that for which it was specifically furnished.2
  3. 3. ContentsIntroduction 5Thinking and doing 6Services and strategiesThe collapse in the value of the mobile gigabyte: myth and reality – Rupert Wood 8Service provider success with M2M: the five ‘Ps’ – Steve Hilton 10The challenge of marketing 4G when 46% of iPhone 4 users think they already have it – 12Martin ScottThe home will be the centre stage of mobile innovation in 2012 – Ronan de Renesse 14Mobile loyalty schemes: much more than a good price – Helen Karapandžić 16Focus should be the watchword for operator-provided consumer cloud services – Tom Rebbeck 18Technology and softwareRCS-e services are welcome, but not a panacea – Stephen Sale 20Real-time charging for advanced services – Larry Goldman 22Becoming more customer-focused with subscriber analytics – Justin van der Lande 24How to make better use of UHF spectrum – Janette Stewart 26Emerging marketsMultiple SIMs: advice for operators in emerging markets – Pankaj Agrawal 28How pricing initiatives drive the adoption of 3G data services in emerging markets – Pankaj Agrawal 30 3
  4. 4. 4
  5. 5. WeLCoMe - to AnALYsYs MAson’sVIeW oF tHe FUtURe oF MoBILeAnalysys Mason is proud to present our latest insights on the mostimportant trends driving the development of the mobile sector, forMobile World Congress 2012.As consulting and research specialists with over 25 years of experiencein telecoms, media and technology, the Analysys Mason team offersa winning combination of extensive industry knowledge, advisoryexpertise and unique research methodologies. Our clients rely on us asa trusted partner in developing strategies for success across the entiremobile telecoms and media value chain.Our expertise in mobile trends and topics is unsurpassed, drawing on the regulatory and strategicexpertise of our senior consultants, the recognised thought leadership of our team of specialistmobile analysts, and a suite of in-depth research programmes covering mobile services, content,technologies and forecasts.To help you get the most out of Mobile World Congress 2012, members of our team have sharedtheir thoughts on some of the key issues that will be important to you during the next 12 months.Themes of some of the key articles include:• operator strategies for M2M success: the five ‘Ps’• mobile data pricing and value: myths and realities• driving mobile innovation in 2012: the increasing importance of home usage for the consumer mobile market• mobile subscriber analytics – operator approaches and revenue opportunities• mobile loyalty schemes – case studies and recommendations• multiple-SIM markets – best practice for maximising customer value and minimising churn• white-space spectrum – making better use of UHF spectrum.We hope you find these opinion pieces and expert commentaries of interest and value. We welcomeyour feedback and encourage you to contact the authors directly if you would like to discussany of the points they have raised, or are looking to understand how a specific issue or trend willaffect your business. To find out more about our experience and services, please visitwww.analysysmason.com.We look forward to working with you to support your success in the mobile market in 2012 andbeyond.Kind regards, Bram Moerman Chief Executive Officer Analysys Mason 5
  6. 6. tHInKIng And doIngWhat we offerKnowing what’s going on is one thing. Understanding how to take advantageof events is quite another. Our ability to understand the complexworkings of telecoms, media and technology (TMT) industries and drawpractical conclusions, based on the specialist knowledge of our people,is what sets Analysys Mason apart. We deliver our key services via twochannels: consulting and research. Washington DC -5.00 South Georgia -2.00 San Francisco -8.00 Buenos Aires -3.00 Mexico City -6.00 Cape Town +2.00 Anchorage -9.00 Auckland +12.00 New Delhi +5.30 Singapore +8.00 Vanuatu +11.00 Bangkok +7.00 Sydney +10.00 Moscow +3.00 Caracas -4.00 Samoa -11.00 Denver -7.00 Azores -1.00 Tahiti -10.00 Dhaka +6.00 London 0.00 Dubai +4.00 Tokyo +9.00 Paris +1.00 THINKING MARKETS THINKING MOBILE THINKING SYSTEMS THINKING TECHNICAL6
  7. 7. Consulting ResearchOur skill set is broad. It has to be. Our clients Analysys Mason Research provides dedicatedin the telecoms, media and technology (TMT) coverage of developments in the TMT sectors, withsectors operate in dynamic markets where change a range of research programmes covering differentis constant. We help shape their understanding of services and regions of the world.the future so they can thrive in these demandingconditions. To do that, we have developed rigorous The division consists of a specialised team of more than 50 analysts, based in our 12 offices around the world, who provide dedicatedmethodologies that deliver real results for clients coverage of TMT issues, trends and traits. Our seasoned analystsaround the world. understand not only the complexities of the TMT sectors, but the unique challenges of companies, regulators and other stakeholders operating in such a dynamic industry.For over 25 years, our consultants have been bringing the benefitsof applied intelligence to enable clients to make the most of their Our 26 research programmes cover five key areas:opportunities. • consumer servicesUnlike some consultancies, our focus is exclusively on TMT. We • enterprise servicesadvise clients on regulatory matters, support multi-billion dollarinvestments, advise on network performance, and recommend • network technologiescommercial partnering options and new business strategies. Such projects result in a depth of knowledge and a range of expertise • telecoms softwarethat sets us apart. • regional markets. Each programme provides a mixture of quantitative deliverables, including access to over 3 million consumer and industry data points, Regulation as well as research articles and reports on emerging trends drawn from our library of past and present research and consulting work. The research division works closely with our consulting practice, next- providing data points and insights on existing markets, the generation transaction development of future technologies and usage trends. networks support Unlike other analyst firms, our research specialises in niche markets Telecoms, or subjects, offering clients unparalleled levels of expertise in a Media and specific segment of the industry. Each of our 26 research programmes is championed by a Principal Analyst with decades of Technology experience in their relevant field. (TMT) strategy procurement and and ICt planning Marketing and products For more information:We look beyond the obvious to understand a situation from a client’s www.analysysmason.comperspective. Most importantly, we never forget that the point of consulting@analysysmason.comconsultancy is to provide appropriate and practical solutions.We help clients solve their most pressing problems, enabling them research@analysysmason.comto go further, faster and achieve their commercial objectives. 7
  8. 8. seRVICes And stRAtegIes The collapse in the value of the mobile gigabyte: myth and reality RUpeRt Wood Principal Analyst Fixed Networks research programme rupert.wood@analysysmason.com Just over a year ago, Analysys Mason Research published a number of papers suggesting that the mobile data explosion – at least in a European context – was a“In November bit of a myth.1 In particular, we said two things: 2010, we estimated European mobile • most mobile data growth forecasts are wildly exaggerated data traffic was • a combination of demand trends and pricing could be enough to avoid the growing at an ‘inevitable’ collision of surging demand and collapsing value of the gigabyte (GB). annualised rate of 35%.” These papers had a mixed reception. Some vendors Furthermore, we wrote the following in 2010: were outraged, and others were incredulous at Myth: The value of transporting a byte is collapsing prognoses so out of kilter with received industry opinion, in particular that of the de facto gold Reality: This was emphatically true up until the end standard in this area, the Cisco Visual Networking of 2009, but the rate of decline has slowed recently. If Index (VNI). However, some European mobile operators manage to preserve the premium for operators privately told us we were more or small-screen data, the value of transporting a byte of less right. data could actually rise as the mix of large-screen and small-screen becomes more beneficial to the So it is reassuring – for us at least – to hear that operator.3 Vodafone confirmed those two points in December 2011.2 Vodafone stated that its annualised European In fact, we thought – perhaps a little cynically – that revenue growth in data was 21% between July and MNOs’ sudden enthusiasm for tiered handset data September 2011, whereas volume growth was just pricing in late 2010 had more to do with the desire to 19% in the same period (down from over 90% a year hang on to the handset data premium than with previously). This means the value of a GB is actually networks falling over under the weight of data. increasing. AT&T has more recently indicated that its mobile data traffic growth rate had slowed sharply to Of course, Vodafone is just one case, and despite its under 40%. size, is not generally the largest data carrier in its 13 European markets. But neither is it usually the In November 2010, we estimated European mobile smallest, and it is far from alone in having modest, data traffic was growing at an annualised rate of essentially controllable, growth in mobile data 35%. We subsequently revised this upwards, in part volumes; the steady trickle of information that comes because we thought we had underestimated the back to us from the players that really matter in the effects of seasonality on data consumption. industry, those at the ‘RAN-face’, has mostly – but not universally – tended to confirm what we originally At the second quarter of 2011, the volume of mobile thought. data traffic in individual European countries grew at rates below 100% year-on-year, and in many cases So what are the main conclusions we can draw below 50% (see Figure 1). The general trend in from this? growth rates is down, but this has to be understood in part as a natural statistical phenomenon: growth • The idea that mobile operators are the passive rates of new services in early years will always look victims of some demand force of nature is just very high. Note that these figures are year-on-year muddle-headed. Open-ended demand forecasts whereas Vodafone’s are annualised. If, as expected, that do not take into account operators’ ability to growth rates slow, current year-on-year growth rates finance data networks are meaningless – and so will be higher than annualised rates. are forecasts that simply assume operators will have to bow to consumer pressure for flat-rate pricing. Pricing is actually a very effective lever. 8
  9. 9. “The structure of mobile data traffic in most European countries and on the majority The challenge for mobile of European networks is so heavily weighted towards large-screen traffic that it is operators is to target the softest, most profitable parts unlikely that previous growth rates will ever be reached again unless LTE breathes of the fixed broadband subscriber base as fixed new life into fixed–mobile broadband substitution.” broadband operators slowly renew their access networks. The reward for success is ARPU levels for mobile broadband similar to those• Fixed broadband soaks up a huge share of The structure of mobile data traffic in most European of fixed double-plays. small- and mid-screen wireless device data. Our countries and on the majority of European networks own primary-research consumer surveys bear this is so heavily weighted towards large-screen traffic out. In countries where fixed broadband is that it is unlikely that previous growth rates will ever widespread, the reality is that smartphones and be reached again unless LTE breathes new life into tablets are essentially fixed broadband devices fixed–mobile broadband substitution. In most with additional mobile functionality. countries, small-screen traffic is still too small a part of the overall total to drive these giddy growth• Most mobile operators should be reasonably happy rates. The challenge for mobile operators is to target that fixed operators are bearing this excess traffic the softest, most profitable parts of the fixed for the time being. broadband subscriber base as fixed broadband• A genuinely compelling 4G fixed–mobile operators slowly renew their access networks. The substitution (FMS) product priced at a similar but reward for success is ARPU levels for mobile competitive level to basic fixed broadband broadband similar to those of fixed double-plays. double-plays but with the added advantage of untethered mobility is the compelling reason for mobile operators to attempt to service this traffic. This is at the core of Vodafone’s LTE strategy: not a response to a capacity crunch that can be managed by pricing and distribution over Wi-Fi, but as a platform for next-generation broadband services. 300% Austria Apps 250% Denmark Growth rate (year-on-year) Web Finland 200% Email Germany Games Hungary 150% Italy Social networking Lithuania Music 100% Netherlands IM Norway 50% Portugal Video Sweden Business 0% UK 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 0% 25% 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 Percentage of responden Figure 1: Year-on-year growth rate of volume of mobile data traffic, selected European countries, 4Q 2008–2Q 2011 [Source: Analysys Mason, national telecoms regulatory authorities, 2012] Early adopters Mass market adoption Up-sell/cross-sell1 For more information, see Analysys Mason’s The mobile data explosion is a myth; The mobile data explosion: myths and reality; and New unlimited mobile – premium pricing – pricing model innovationdata tariffs are exceptions, not an emerging trend. Available at www.analysysmason.com. – new revenue generating services soft caps, based on data charge advice to prevent bill shock personalised value based pricing2Presentation by Richard Feasey, Director of Public Policy at Vodafone Group, to the International Institute of Communications (IIC) conference, Washington, consumption time-based usage for casual users and chargingDecember 2011. network congestion service pass ( Wi-Fi) shared data plans (3G and 4G, management happy hour promotions devices, networks, users)3 For more information, see Analysys Mason’s The mobile data explosion: myths and reality. Available at www.analysysmason.com. 9 ation within base traffic shaping/prioritisation turbo boosts zero rating applications (OTT) personalisation multi-service bundles (+ dynamic session data)
  10. 10. seRVICes And stRAtegIes Service provider success with M2M: the five ‘Ps’ steVe HILton Principal Analyst Enterprise research programme and Small and Medium-sized Enterprise Strategies research programme Service providers that prioritise opportunities, place their teams properly, participate steve.hilton@analysysmason.com knowledgeably in the supply chain, form partnerships effectively and establish credible personae are bound for success in the machine-to-machine (M2M) services market.“We asked 12 We refer to these five concepts – prioritisation, placement, participation, partnerships leading service and persona – as the five ‘Ps’ of M2M (see Figure 2). Service providers that address the providers about all five Ps of M2M will better align their growing M2M business units with the demands aspects of their of the market. M2M businesses.” We glean many of our findings from our M2M Placement of teams scorecard for communications service providers: The decision whether or not to centralise M2M 2011.1 This is based on the responses of 12 service human resources is a critical driver of M2M success. providers – AT&T, Deutsche Telekom, Everything No doubt certain resources – including R&D, Everywhere, KPN, Sprint, Telekom Austria Group, partnership management and OSS/BSS support – Telefónica, Telenor Connexion, TeliaSonera, Telstra, should be centralised. However, there are nuances Verizon Wireless and Vodafone – to a 33-question associated with organisational design that are survey of their M2M strategy, size of business, R&D unique to M2M. For example, where should technical commitment, partnerships, platform insights and pre- and post-sales resources be placed? network insights. Centralised in a corporate role or in a local field role? the five ps in more detail And what should be the relative size or head count of each M2M functional area? Prioritisation Participation Service providers have myriad opportunities in M2M, but only careful prioritisation of these opportunities There are three distinct routes to market for service will yield healthy, profitable businesses. Analysys providers offering M2M solutions: co-selling Mason has found that some of the M2M applications partners’ solutions, selling or reselling their own generating the highest revenue can be relatively solutions and acquiring solutions. We believe that unprofitable for service providers. Opportunities service providers should form partnerships to abound in sectors such as automotive and transport, provide M2M hardware (modems and modules, and energy and utility, security, government, retail and equipment) and that they should sell or resell their industrial. There are opportunities for wireless, own connectivity, platform and integration services. satellite and fixed-line service providers to profit The application layer presents the greatest from these, but profitability metrics will vary conundrum in a service provider’s route-to-market according to the M2M application, the country of strategy: successful service providers will conduct a operation and the cost characteristics of each service thorough analysis of their application capabilities provider. before determining their best route to market for this challenging aspect of the supply chain. 10
  11. 11. Service providers that “Service providers that address the five Ps of M2M will better align their growing prioritise opportunities, place their teams properly, M2M business units with the demands of the market.” participate knowledgeably in the supply chain, form partnerships effectively and establish credible personae are bound for success in the machine-to-machine Partnerships Persona (M2M) services market. Partners are necessary for service providers’ M2M A service provider must establish an identity or go-to-market approaches. Service providers must image of itself in the M2M market that must be review the partnership landscape systematically, by credible in light of its existing brand and of geography and application, in order to find those best awareness of its services in the enterprise market. A suited to their needs. It is important to keep in mind service provider can use its existing brand to build its that the best partners in providing M2M services to M2M marketing image. We suggest that they engage the utility and energy sector may be different from in market research in order to determine the best partners in offering services to the enterprises’ perceptions of their M2M and other healthcare sector. To complicate matters further, the enterprise technology capabilities. best partners can often vary by the region of the world or country. On which M2M opportunities should a provider focus, based on revenue and profitability? Prioritisation What should a provider Placement What is the best M2M use to create an M2M Persona of teams organisational structure?e marketing identity? Partnerships Participation Who are the top M2M What role should a partners and how should provider play in the providers choose them? complex supply chain? Figure 2: The five ‘Ps’ of M2M [Source: Analysys Mason, 2012] Under-optimised 1800MHz network • Indoor coverage issues/call drops Growth and profitability challenges 1 See Analysys Mason’s M2M scorecard for communicationsbehaviour Sales force service providers: 2011. Available at www.analysysmason.com. 11 • Month-/quarter-end effort to Pantone 274 Pantone 293 Pantone Process Personnel opex meet sales targetstwork investments • Pushing for network coverage RGB 34/31/114 RGB 0/103/177 RGB 0/174/239 Increasing capacity expansion and discounted Network opex
  12. 12. seRVICes And stRAtegIes The challenge of marketing 4G when 46% of iPhone 4 users think they already have it MARtIn sCott Principal Analyst Fixed Broadband research programme martin.scott@analysysmason.com Informing consumers of the benefits of LTE, HSPA+ or any mobile data service that might be promoted as ‘4G’ may be a challenge. This is partly the result of misleading“About 28% of iPhone marketing as to what exactly constitutes 4G. More than 6% of mobile users believe users believe that that they already have a 4G handset, according to the results of our latest Connected they already have a Consumer Survey, conducted across six European countries and the USA. More 4G-capable handset.” than half of consumers do not understand mobile network generations or are unsure of the connectivity generation of their phone (see Figure 3). Apple’s numbering of iPhone models (and occasional • Support for bandwidth-heavy services: LTE will use of ‘G’ as an abbreviation for ‘generation’ – at also significantly reduce the latency of mobile data least for its iPod products) has also confused connections, which will improve online gaming consumers. About 28% of iPhone users believe that capabilities and video communications in they already have a 4G-capable handset. This figure particular, as well as the mobile browsing rises to more than 46% for iPhone 4 users. experience in general. Apple has made a significant impact on the mass-market penetration As a result, operators will face a significant of video calling through the introduction of challenge when it comes to marketing and selling FaceTime. LTE will increase the reliability of such handset-based 4G services to consumers. To educate services over the cellular network. Furthermore, users about the benefits of LTE and 4G, service games for mobile devices will increasingly include providers will need to focus on the differentiating an online element, as they have for consoles and factors of the new access technology from an PCs. 4G data services will reduce latency to enablement point of view, rather than solely from a near-wireline levels for such games, significantly technical one. The following two key benefits improving playability. immediately spring to mind. However, the risk is that operators may turn the • Convenience: LTE enables consumers to use battle for market share entirely into an exercise in mobile data services with a much higher degree of rhetoric – something that operators that have not reliability than previous-generation data networks invested heavily in LTE yet, or lack the required – particularly deeper into buildings and while on spectrum, are banking on. For example, when US the move – and at higher data rates. Many users operator T-Mobile failed to acquire spectrum for LTE abandon efforts to load a photo on their phone or in the 700MHz spectrum auctions, it invested in look up an entry on Wikipedia because the loading backhaul to improve average throughput. The time is too long. These consumers would usually operator then began to market its enhanced 3G then either wait until they had a more reliable services not just as 4G-like, but actually as 4G connection (for example, over Wi-Fi) or, more services. “When consumers look at 4G ... if you ask often, would simply not make the page request nine of ten, they’ll say it’s about the speed,” explained again, in which case an instance of revenue- a spokesperson from T-Mobile.1 generating data usage has been lost. More- advanced mobile data services – particularly LTE – will reduce the number of such lost opportunities considerably, by providing better throughput-per- user on congested cells and better performance for users when they are on the move. 12
  13. 13. “Games for mobile devices will increasingly include an online element, as they have Accordingly, articulating the technical aspects of new for consoles and PCs. 4G data services will reduce latency to near-wireline levels for mobile data services is also important. In the example such games, significantly improving playability.” given, rival operators were quick to criticise T-Mobile’s approach, but may have been wary of emphasising the technical superiority of their own networks Accordingly, articulating the technical aspects of new Analysys Mason’s report, The Connected Consumer because they were also mobile data services is also important. In the Survey 2012, provides highlights from our using the ‘4G’ badge for example given, rival operators were quick to criticise 7500-respondent consumer survey across Europe services that fell short of T-Mobile’s approach, but may have been wary of and the USA.2 the ITU definition. emphasising the technical superiority of their own networks because they were also using the ‘4G’ badge for services that fell short of the ITU definition. 100% 90% Percentage of respondents Pantone 274 Pant 80% RGB 34/31/114 RGB 70% 4G 60% 3G 50% 2G 40% Unsure 30% 20% 10% Pantone 518 Pant RGB 90/33/73 RGB 0% All iPhone 4 Question “Which of the following personal devices do you own or use > mobile phone > network generation”; n = 7140. Figure 3: Handset owners’ understanding of their mobile network generation, by handset type [Source: Analysys Mason’s Connected Consumer survey, 2012]2 IANA Regional address administrationRIRS (x5) Global responsibility for address management Pantone 711 RGB 231/25/57 ISPs Address allocation for their customers 1 TheHuffingtonPost.com (Herndon, VA, 2010), T-Mobile Renames Upgraded 3G Network ‘4G’. Available at http://www.huffingtonpost.com/2010/11/03/t-mobile -4g-network_n_778518.html. 2 For more information, see Analysys Mason’s The Connected Consumer Survey 2012. Available at www.analysysmason.com. 13
  14. 14. seRVICes And stRAtegIes The home will be the centre stage of mobile innovation in 2012 RonAn de Renesse Principal Analyst Mobile Broadband research programme and Mobile Content and Applications research programme Usage of mobile devices in the home increased significantly last year – partly ronan.derenesse@analysysmason.com because of the launch of tablets, but also because of improvements to the user experience of browsing, social networking and email delivered over smartphones.“ Smartphones will Analysys Mason’s Connected Consumer Survey indicates that mobile users claim to continue to replace be using web, email and social networking services nearly twice as much on the PC as a means of smartphones as the average for all handsets.1 About 93% of smartphone owners use checking emails and their smartphones while at home, according to a study from Google.2 social networking in the home.” This trend is set to continue throughout 2012, and mobile/home interaction paradigm is set to bring a will spark the following strategic changes in the new innovation platform to the application space. mobile industry. For instance, several companies have found a way to synchronise TV sets and smartphones such that • Smartphones will continue to replace the PC as a the smartphone is aware of what is being watched means of checking emails and social networking on TV. This could have many applications – in the home. A report released in August 2011 by especially around advertising. Ofcom, the UK’s telecoms regulator, indicated that 15% of adult smartphone users claimed to be • Leading smartphone OS companies that also have using a computer less since having a smartphone.3 strong interests in the TV industry, such as Apple, This cannibalisation also happens outside the Google and Microsoft, will find a new home, where smartphones can easily replace battleground in the home in 2012. Apple is mobile broadband for emails and web browsing. expected to launch a TV set in 2012, Google For example, the growth rate for the number of announced several partnerships with TV active mobile broadband SIMs was 2.6% on manufacturers and Microsoft is already present in average among European countries in the third this market thanks to the Xbox. Apple and Google quarter of 2011, down from approximately 12% are set to transform the TV industry in the same two years earlier.4 Service providers should way they revolutionised the mobile market, accommodate this shift among their users by primarily via software differentiation. The parallels offering products tailored to smartphones. It is that will run between the TV and mobile industry critical for all the top Internet destinations to are set to emphasise interactivity between the two provide an excellent user experience on mobile, platforms. The impact and opportunities created particularly on high-end smartphones. by this small revolution will extend beyond the device space into the networks. Integrated • Smartphones will interact with other home operators will use the resulting new features as a devices, such as the TV or Hi-Fi system, in a differentiator or as an incentive to take up their better, more-integrated manner. The social top-tier packages. aspect of consuming content will drive most of the interaction. Start-up companies such as AdaptiveBlue (with its GetGlue service), Miso and zeebox, all of which provide mobile-based comment sharing platforms focusing on TV shows or films, will grow significantly. For example, BSkyB invested in a 10% equity stake in zeebox, in a deal worth GBP10 million (USD15 million). The 14
  15. 15. “Leading smartphone OS companies that also have strong interests in the TV Smartphones will interact industry, such as Apple, Google and Microsoft, will find a new battleground in the with other home devices, such as the TV or Hi-Fi home in 2012.” system, in a better, more-integrated manner. Apps Web Email What should a provider iPhone use to create an M2M Per Games Smartphone marketing identity? Social networking All Musicds IM Pa Video Who are the top M2M partners and how should Business providers choose them? 0% 25% 50% 75% Percentage of respondents that use service or app Question “Which of the following services or devices do you currently use on a regular basis on a mobile phone (at least once within the past 3 months)?”; all respondents; n = 6803. Figure 4: Mobile users’ usage of services and apps, by handset type [Source: Analysys Mason, 2012]1 Under-optimised 1800MHz network • Indoor coverage issues/call drops Growth and profitability challenges Sales • Mo Personnel opex m Network opex Network investments • Pu • Increasing capacity ex Asset utilisation Network opex • Increasing coverage pla Retail Call centre opex S&D opex • Op 1 See Analysys Mason’s Report The Connected Consumer Survey 2012. Available at www.analysysmason.com. Service issues • SIM % first-call resolution • Increased number in-bound % inactive user 2Google (Mountain View, California, 2011), The Mobile Movement: Understanding Smartphone Users. Available at http://www.thinkwithgoogle.com/insights/ calls per customer uploads/23600.pdf. • Poor complaint resolution rate 3 Ofcom (London, UK, 2011), Communications Market Report: UK. Available at http://stakeholders.ofcom.org.uk/binaries/research/cmr/cmr11/UK_CMR_2011_ FINAL.pdf. 4 % churn See Analysys Mason’s Comment Mobile broadband connections in Europe: tablets have yet to make a noticeable impact. Available at www.analysysmason.com. 15 Consumer behaviour • SIM use and throw away % inactive • Secondary SIM
  16. 16. seRVICes And stRAtegIes Mobile loyalty schemes: much more than a good price HeLen KARApAndžIC Lead Consultant Custom Research helen.karapandžic@analysysmason.com In the face of flat subscriber growth in mature markets, more operators are turning“Well-targeted to loyalty programmes as a way of maintaining subscribers. A recent benchmark schemes can engage study conducted by Analysys Mason suggests that more than 90% of mobile those segments of operators in Europe offer one or more such programmes. the customer base that have a higher Our work with mobile operators has found that in Analysys Mason has previously categorised loyalty order to build a successful loyalty scheme, the schemes into three broad types (see Figure 5). The propensity to churn.” following points need to be taken into consideration: programmes offered are very varied in terms of the type of scheme, the target customer, the costs • Loyalty is not just about specific programmes, but involved in delivering the scheme, and the benefits also about basic ‘hygiene factors’. Loyalty provided, both to the customer and the operator. The programmes are not a panacea for reducing success of loyalty schemes also varies significantly. churn: operators need to make sure the basics, like customer satisfaction and pricing, are right Mobile loyalty schemes are becoming increasingly before loyalty programmes will have an impact. We varied and innovative as operators seek to believe that there are many short-term measures differentiate their offerings. Indeed, some operators that operators can still take to improve these now offer multiple schemes within their respective hygiene factors, such as making sure offers are markets. As an example, GLOBUL in Bulgaria offers clear and transparent. a number of loyalty schemes as part of its ZAEDNO (‘together’) programme, each with its own package of • A different approach is required for different benefits and conditions. These include: customer segments and, crucially, for customers at different stages of their life cycle. For example, • Loyalty discounts and preferential tariffs for different rewards will appeal to new customers contract customers who have been with GLOBUL and to customers who have been with their for over a year. operator for many years: the latter may want a • The GLOBUL UBB MasterCard, which offers simple thank-you for their long tenure. Initiatives customers a discount on their monthly phone bill to promote loyalty should reflect this. equivalent to 2% of the amount they spent on their • Loyalty is not only about providing a good price. GLOBUL credit card in the previous month, up to Pricing is likely to become more stable in a mature the value of BGN60 (USD42.68). market, and loyalty becomes less about functional • Shell Smart, a points-based reward scheme or transaction items such as cheaper services or offered in collaboration with Shell, which rewards discounts on handsets, and more about users with points which can be redeemed at Shell psychological or emotional factors, including petrol stations against products and services in a brand image and customer perception. catalogue, as well as seasonal promotions • Key lessons can be learned from case studies (depending on subscribers’ monthly mobile spend). showing international best practice. Despite the For telecoms operators, the benefits of mobile loyalty widespread deployment of mobile loyalty schemes, schemes vary depending on the type of scheme their success has been variable. International offered and the extent to which they respond to the benchmarking can help avoid these pitfalls, as target customers’ attitudes and emotions. Get it well as identifying best-practice features that an right, and loyalty schemes can encourage tenure, operator can transfer to its own practices in order spend and/or promotions: well-targeted schemes to improve performance. 16
  17. 17. “Analysys Mason has previously categorised loyalty schemes into three broad types Mobile loyalty schemes are The programmes offered are very varied in terms of the type of scheme, the target becoming increasingly varied and innovative as operators customer, the costs involved in delivering the scheme, and the benefits provided, both seek to differentiate their to the customer and the operator.” offerings. Indeed, some operators now offer multiple schemes within their respective markets.can engage those segments of the customer base Analysys Mason provides independent advice to that have a higher propensity to churn (the ‘right’ assist mobile operators in the design andcustomers). Get it wrong, and the scheme may end implementation of successful loyalty programmes.up rewarding existing behaviour (thereby decreasing To learn more about our services in this area,revenue to potentially no benefit), alienating including market assessments, customer surveyscertain customer segments for whom the scheme and workshops, contact us by phone at +44 845 600 is poorly targeted, or turning out to be costly or 5244 or by email at enquiries@analysysmason.com.complex to administer. type of description examples scheme Points Customers collect points T-Mobile Austria’s Flamingo scheme is a points- based on spend/tenure, which based loyalty programme open to both prepaid and can be redeemed for contract subscribers. It offers both telecoms telecoms rewards (for benefits – including airtime and handset discounts example, a new handset) or (depending on mobile spend) – and non-telecoms non-telecoms rewards (for benefits through a partner programme example, a leather wallet) Aircel India’s Advantage is an exclusive points- based scheme for contract customers who have spent INR400 (USD7.98) or more each month for a year. Customers are rewarded with special offers on telecoms goods and non-telecoms services (such as a 20% discount on a pizza, invitations to events) Event Customers are rewarded with Telefónica UK (O2) has tied itself to music through something special – typically venue sponsorship and the Priority programme, access to events which offers all O2 customers access to tickets 48 hours before general sale France Telecom’s Orange has a long-running cinema promotion, which offers all customers two tickets for the price of one on Wednesdays Top-up Customers receive rewards Proximus Belgium offers a top-up rewards scheme for each time they top up. Prizes prepaid customers called Play&Gold, which is can be telecoms (for example, designed to look like a game. Entry to the game, which free SMS) or non-telecoms is played online, is obtained by topping up at least (such as a holiday) rewards EUR15 (USD20.87). Participants receive a guaranteed telecoms prize (such as a five-minute call) and a chance to win a big prize (for example, a world trip) Figure 5: Overview of types of loyalty scheme [Source: Analysys Mason, 2012] 17
  18. 18. seRVICes And stRAtegIes Focus should be the watchword for operator-provided consumer cloud services toM ReBBeCK Head of Custom Research tom.rebbeck@analysysmason.com“Telecoms operators Improved connectivity, the launch of high-profile services such as Apple’s iCloud have a poor record and the search for new revenue streams have inevitably caused mobile operators to for developing new consider launching consumer cloud services. However, we believe that the services.” potential revenue upside from most consumer cloud services (with the possible exception of cloud-based gaming) is limited for operators. Rather than trying to generate revenue by competing it is becoming easier for start-up companies to directly with the range of cloud services, operators launch services. As an example, Outside.in, a would do better to focus on a narrower set of provider of local information, started with a few services (see Figure 6) and consider how they could hundred thousand US dollars in 2006. Its founder, protect existing revenue. Steven Johnson, has estimated that, if the company had started five years before, it would have required Mobile operators need to establish partnerships USD50 million to launch the same service.1 The when trying to offer consumer cloud services venture capitalist Fred Wilson has made similar Telecoms operators have a poor record for claims in his blog. An operator’s cloud services developing new services. Telecoms operators are would compete with a few large, extremely well- essentially conservative – they make a huge amount funded companies as well as hundreds of small of revenue from a stable set of products (voice, start-ups. Operators need to consider how to use messaging and data). New cloud services are their advantages, such as large customer bases and unlikely to get the same focus or budget as other existing products, to differentiate their services. divisions. Even where a budget is made available, it Start-ups are experimenting with a variety of may be vulnerable to being withdrawn if the new business models and are often content with low cloud service does not show early success. Mobile revenue. The business models used can involve a mix operators need quick wins to help build momentum of advertising, subscriptions, one-off fees, premium in the cloud space. Partnering, rather than internal features and so on. Some companies (such as Viber) development, may be the quicker route to market. do not appear to generate revenue at all, but are Unsuccessful services could damage an operator’s concentrating on building a user base, as Facebook, brand. Any security breaches related to customer Google and Twitter all did before. Operators will need data, or poor user experiences, will undermine to be flexible in developing business models for their consumer trust in, and reliance upon, the service services and may have to accept low or zero revenue provider. For operators, a subscriber’s lack of trust while building a user base. could spread beyond the cloud services and put the Large companies that offer cloud services are often entire subscription at risk. Partnerships may help to doing so in spite of generating zero revenue. Apple, limit this risk. Google and Microsoft all have offerings that could be Operators also face stiff competition from other classed as consumer cloud services. However, many companies in the cloud space of these services support the core businesses of these companies and do not generate revenue The supply side of the cloud services market is directly. For example, iCloud is offered without hugely fragmented. As barriers to entry come down, 18
  19. 19. “Large companies that offer cloud services are often doing so in spite of generating Given this competitive zero revenue. Apple, Google and Microsoft all have offerings that could be classed as environment, operators cannot expect to generate consumer cloud services. However, many of these services support the core businesses high levels of direct revenue of these companies and do not generate revenue directly.” from consumer cloud services. Instead, they should focus on opportunities that reinforce their core services andcharge (for up to 5GB of storage) as a way of helping Given this competitive environment, operators cannot increase loyalty, partneringsell more Apple devices, and Google services create expect to generate high levels of direct revenue from wherever possible.more advertising space. Where operators compete consumer cloud services. Instead, they should focuswith large, extremely well-funded companies, these on opportunities that reinforce their core servicescompetitors may be using their extensive financial and increase loyalty, partnering wherever possible.resources unconcerned by the lack of significantdirect revenue. services example opportunity and advantage for Remote control and monitoring XFINITY Home Security (Comcast) High Cloud-based gaming OnLive High Standalone cloud video Netflix, iPlayer (BBC) Medium Synching iCloud (Apple) Medium Back-up and locker Dropbox Medium Streaming music Spotify Medium Music locker My Music Anywhere (The Carphone Warehouse) Low Consumer web Google Docs Low Figure 6: Assessment of the potential for selected consumer cloud services [Source: Analysys Mason, 2012]1 Jarvis, J., What Would Google Do?, HarperCollins (New York, 2009), p. 192. 19

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