Why partnership is key to success
Why partnership is key to success
Indra Gunawan, Telecommunications analyst, Jakarta
After expanding about 71 percent from 1999 to 2000, the local
wireless market experienced a substantial plunge last year, with
sales volume down to 385 million handsets from 412 million the
previous year.
Are 2001's figures a bad sign for the future of both cellular
manufacturers and operators in a market with such huge potential?
Like it or not, most stocks of IT-related businesses
worldwide, including telecommunications firms in Asia, have lost
popularity.
To survive, operators are offering a variety of new services,
on top of the usual voice and SMS facilities, to subscribers in
an effort to raise their Average Revenue Per User (ARPU). Many
are now working hard to introduce their new products, such as
General Packet Radio Service (GPRS), Unified Messaging Service
(UMS) and Multimedia Messaging Service (MMS).
But this technology will do little for the ARPU if not
supported with adequate applications and content. A provisioning
service makes customer more comfortable, as they no longer need
to set parameters, like Wireless Application Protocol (WAP), MMS,
Java and so on.
Operator also can create a new brand for their services by
cooperating with a strongly branded company to make a Mobile
Virtual Network Operator (MVNO). With the new brand, they can
easily reach different market segments.
A new product also can be created through cooperation with a
strong brand service provider. ICQ, a big company and a strong
brand, with 135 million members around the world, is a promising
company in terms of cooperation. By teaming with ICQ, the brand
of an operator would be strengthened.
If we look at all the products available on the market, we
will see that all mobile device manufacturers are coming up with
nice products that are small, handy and stylish. On the other
hand, those products that cannot fill these requirements will be
abandoned by users.
Most users in Asia, especially in Indonesia, have a unique
characteristic. Quite a number prefer the trendiest cellular
phones equipped with the latest technology. They feel a kind of
pride in carrying them around, although most of them never make
proper use of the state-of-the-art technology.
Remember Wireless Application Protocol technology? When it was
introduced everyone wanted to use mobile phones with WAP. Today,
it is similar with GPRS -- providing high-speed access to data,
the latest reason for users to replace their handsets.
But the question is, can technology actually boost sales
volume for mobile phone manufacturers? Data from the marketplace
is pretty clear. Technology is no longer the main issue. The
types of cellular phones that are favored and are currently
enjoying high sales are not cluttered with every bit of
sophisticated technology. Apart from their trendy designs, they
are simply "conventional" cellulars with basic features like SMS
and some entertaining games. Most importantly, the price should
be in the middle range.
Technology does not seem to be a strong point if customers do
not understand its real advantages, meaning useful application is
more advantageous than the technology itself. The manufactures,
of course, are aware that technology will be useless if it is not
used frequently. Therefore they concentrate on providing not a
mere communications device, but also completing it with advanced
entertainment facilities, such as a radio terminal, color
display, polyphonic sound, digital camera, long SMS, Java
enabled, etc.
To satisfy their subscribers' demands, operators also provide
interoperable facilities, so they can communicate with each other
even if they use different brands.
Many users probably get a headache at the mention of "GPRS",
but once its various benefits are clearly spelled out, like the
easy access to a wide range of information, sending e-mails,
downloading and changing the logo or ringtones, using the
cellular phone as a modem to access the Internet via a laptop,
etc., only then will the message get across.
One of the keys to success for the i-mode services provided by
NTT DoCoMo is application. i-mode would not be enjoying its
current 32 million subscribers -- roughly a quarter of Japan's
population -- if they were just offering limited and boring
content to subscribers.
With around 50,000 sites on the Internet it is the market
leader in Japan, and now its services have started luring
cellular users outside Japan.
Strategic alliances for i-mode are being formed with an eye on
third-generation mobile phone services. The European version of
the i-mode service was launched in March 2002 in Germany by E-
Plus, and in April in the Netherlands by KPN Mobile. The i-mode
service is also planned for Belgium through BASE (formerly KPN
Orange) and Taiwan through KGT.
The availability of applications is another key to success, so
application developers and content providers have to enrich their
services and create more interesting content. With the existing
amicable relations between cellular operators and content
providers, developers will be interested in making many
applications.
To support a more complex application, Third Generation (3G)
cellulars will transfer data at a very high speed, theoretically
up to 2 Mbps.
NTT DoCoMo gives 91 percent of application revenue to content
providers, because as the network provider NTT DoCoMo also gets
its income from packet transmission charges.
The problem in Indonesia is that even though many talented
developers exist they are not interested in working as
developers, because they are worried about their future. They
worry they will not make any money from the applications they
make.
Today very few providers are able to offer the entire range of
services, which is why partnership is the key to success. It is
really up to the operators to come up with the appropriate
charging system, otherwise all this expensive technology will
remain untapped with subscribers getting no advantages from it.
However, the future is not that bleak.
Apart from the numerous products enhanced with the most
sophisticated features that keep entering the market, other
factors necessary to wake up the dozing market are appropriate
rates from operators, an amicable relationship between operators
and application developers and, most importantly, "loudly and
clearly" communicating all these for the benefit of customers.