Sexy telecoms

What are the features you find more important to choose a handset? Shall it look nice and sexy, shall it have the cutting-edge technologies, or is it simply because it has a nice price? Most probably the answer will depend on who you are, but one thing is for sure, 70%-80% of the non-voice revenues in 2006 came from SMS service. This means beyond doing voice calls, most of the people use handsets to send SMS, and thus, sophisticated services such as TV broadcast and location services (just to mention a few) are not really being used by people. Given that voice and SMS are the appliances that people really use, why is the telecom industry still looking for a "killer application"? A straightforward and consensual answer is that voice revenue margins are continuously eroding and fresh ideas that keep costumers connected are needed.

As the mobile value chain is very fragmented, the industry founded some years ago OMA (Open Mobile Alliance) with the intent of creating interoperable applications. The number of applications standardized by this organization body is huge and it involves the latest advanced technologies. However, it seems adoption of these technologies is slow and revenues mobile operators get from them accounts for a very small part of the pie.

So what's the main "problem" with that? Are these applications expensive to develop or are network operators charging too much for the services they provide? Maybe the answer is both! Some researchers point that mobile phone industry is becoming very similar to the PC industry. As we know, (and as in PC), companies are evolving from vertically integrated to integrators of parts (which are made from other more efficient companies). This is true in most technologies when interfaces between parts of a system become standardized and a single company is able to take advantage of economies of scale and expertise by doing just one part of the system. These kinds of companies are already part of the mobile value chain and some of them perform very well. Regarding the rates applied by MNOs, these new services are not deployed at a low cost, as companies cannot jeopardize themselves. However, it's becoming clear that network operators own an infrastructure that can carry all these applications' bytes. Some experiences are being held - for example, this month in Frankfurt you could subscribe a T-Mobile service that enables sending an MMS to e-mail addresses by a flat rate of €10. Thus, new price structures and utilization patterns will drive the adoption of mobile services.

However, what are the main forces that make people choose their mobile phone? In the developed countries, where purchasing power is higher, people tend to buy handsets for what they look like and not for the features or "complicated" applications they run. The top example is the Motorola RAZR which is a slim phone with an emphasis on design. Another example of this is the partnership between some mobile manufacturers and style brands - for example Motorola teamed with Dolce & Gabbana, and Vodafone with Ferrari. Another example could be Vertu (manufacturer of luxury handsets fully owned by Nokia) that are hand-crafted and where design and luxury are the differentiation factors.

So, maybe there is not a perfect approach but several approaches and the winner, as ever, is the one which delivers what the customer wants, because that... is sexy!