Emerging Markets Communications Strategies

Analyzes the issues facing existing and new players who are looking for a share of growing mobile markets in over 30 developing countries, including the developing regions of Asia and Africa.

February 29, 2012 14:45 telliott

At MWC yesterday, several emerging market operators, led by keynoter Sunil Mittal of Bharti Airtel, cited a lack of affordable smartphones as the key obstacle to growing data services and – not coincidentally – ARPU. (GSMA covers the talks here.)

Mittal called for GSMA to mount a program aimed at producing a $50 smartphone in a year.

As goals go, this is less dramatic than President Kennedy’s 1961 challenge to put a man on the moon before the end of the decade. SA’s Wireless Smartphone Strategies service projects that just under 5% of global smartphones will ship this year with a wholesale ASP under $100, so much of the heavy lifting of meeting the $50 price point has already been done. (See “Global Smartphone Sales Forecast by Price-Tier: 2003 to 2016”.)

Still, it’s ambitious. But even more ambitious would be to offer a $50 smartphone that people in developing countries would actually want to buy and use. I hate to keep beating up on the $38 Aakash tablet – actually, that’s not true: I love beating up on it – but the lesson there is that meeting a price point without providing value for money is a bad idea.

Our recent interviews with potential tablet buyers in developing countries and before that with first-time phone users clearly demonstrated that low and middle income customers are willing to accept some compromises to meet their budgets, but not every compromise. A one megapixel cameraphone might be acceptable, but don’t try to foist off some old VGA sensors just to keep the BOM down. (See “Tablet Prospects in Developing Countries: The Voice of the Consumer” and “Voices of the Next Billion: Mobile Adoption at the "Bottom of the Pyramid")

 

For SA’s blogging from Barcelona, click here


October 12, 2010 04:10 David Kerr

sa photo dk

At CTIA in San Francisco last week, away from the fanfare around LTE rollouts and the next dozen tablet devices (ok, I exaggerate a little), Sprint had an announcement which will have significantly higher impact on mobile broadband adoption and revenues: Sprint ID. 

Sprint ID promises to up the ante on personalization and ease current feature phone users into the smart phone ranks.

Sprint ID offers instant personalization along key themes/packs where the operator has done the heavy lifting of identifying and group related applications of interest to different persona from wallpaper to ringtones to apps. While the one click marketing line is not quite matched by reality given pesky little things like accepting terms and conditions etc, Sprint ID is a significant breakthrough in my opinion as:

  • it broadens the market appeal of Smart phones to current feature phones users with a simple to understand offer in a range of device price points including the critical $49 and $99 levels.
  • it tackles one of the biggest weakness of all app stores: discoverability of content and simple personalization.

Three handsets were featured at launch of Sprint ID: Sanyo Zio™, Samsung Transform™, LG Optimus S™. These three devices cover key price points in the Sprint portfolio and provide customers with a range of form factors, industrial design and brand to meet their tastes. Interesting to note that both LG and Sanyo retain the right to put their own packs on their handsets as well. This is a big win for LG as its Optimus S™ will be available for under $50 with contract giving the vendor a much needed boost in the smartphone space. Samsung meanwhile continues to shine at Sprint occupying the lucrative $149 spot with its Transform™. All three devices of course require a Sprint Everything Data plan.

However, for me the more significant impact is that operators and oems are finally realizing that customers don’t buy phones or services or apps… what they really want are positive experiences

… be that socially connected, sports, education, health and fitness, fashion etc. This is something that our User Experience team has been evangelizing for the last 7+ years. Whether its 80k apps on Android or 250k on Apple store or 10K on RIM, one common experience has been exasperation at the huge waste of time, energy and emotions in finding ANYTHING!!! Which happens first, eyes glazing over or fingers cramping with so much scrolling? Either way the net result is often a disappointing experience which the early smart phone coolaid drinkers have learned to live with.

Newbies to the smart phone arena, will certainly have less tolerance and spend less time to personalize their device and enable applications. Sprint ID is well tailored to the next wave who are taking tentative steps into the smart phone space

 

David Kerr

dkerr@strategyanalytics.com


September 23, 2010 22:09 David Kerr

September 23, 2010

While there has understandably been a lot of attention given to consumer apps post iPhone and the plethora of application stores that have emerged, business mobility and enterprise mobility offer huge potential from horizontal to vertical applications and from smartphones to iPads and tablets to superphones.

In both NA and W. Europe, business customers account for under 30% of users but are the dominant streams of both revenue and profits for operators. On the device side, premium priced models from RIM, Nokia, and Microsoft Mobile licensees as well as the iPhone have long been key drivers of profits in a market where low single digit margins are the norm.  The explosion of smartphone choices has led to the battle ground moving beyond the corner office, to other executive and now increasingly the midlevel manager.

With a new range of devices competing for space in the corporate market, the issue of corporate versus individual liable has become an increasing priority for IT decision makers. Add on the complexity of managing an expanding list of OS (Android, iPhone, Windows Mobile, Symbian, Palm, MeeGo, Bada from Samsung) and the growing importance of mobile portable devices with access behind the firewall and one can already feel a corporate migraine forming…. And that’s before we even discuss device management, mobility policy, device retirement etc. etc.

I am looking forward to CTIA Fall (San Francisco October 5-7) and in particular to the Enterprise Mobility Boot Camp moderated by Philippe Winthrop of the Enterprise Mobility Foundation. The boot camp spread over two days will address many of the issue listed above with our own Andy Brown featured in an analyst roundtable on October 6th.  I look forward to meeting you there. Don’t hesitate to contact Philippe for passes to this the deep dive enterprise mobility event.

David Kerr

David Kerr
Snr. VP - Global Wireless Practice
Tel: +1 617 614 0720
Mob: +1 262 271 8974


June 4, 2010 20:06 David Kerr
sa photo dk

 

 

 

The inevitable movement to tiered pricing which started with Verizon Wireless acknowledging its plans to do so for LTE and has been accelerated with the much anticipated data plan announcement by AT&T this week.  So, what next?

    • Will we see significant priced based competition for mobile data among the top US operators?
    • Will we see significant movement in share of adds for AT&T as iPhone wannabees are tempted by a plan of only $15?
    • What impact will lower data plans for smartphones have on AT&T’s Quick Messaging Devices and Verizon Wireless equivalent?
    • How long before we see family data plans and shared usage across multiple devices?

The move by AT&T is a smart play to extend the smartphone momentum as the low hanging fruit of Apple aficionados, multimedia techies and style seekers willing to pay top dollar has been significantly penetrated.

There is no doubt that the iPhone remains the coolest device on the marketplace and the end to end user experience remains easily the best in class. So, reducing the TCO to attract the next 20% of customers to a paid data plans while educating customers about data usage levels and managing the traffic risk is very smart business in my opinion.

The lower price points will help AT&T maintain its current leading share of smartphone users and may be attractive to casual social networkers

  • Although the 50 photos allowance is not exactly generous! For casual messenger, and social network status checking and moderate email the new DataPlus plan is quite attractive overall and will likely attract a portion of customers who would otherwise opt for a Quick Messaging Device from AT&T or a competitive offering from Verizon Wireless.

I do expect to see some modest price competition among the big operators

  • with T-Mobile most likely to drive prices lower given their need for scale and to protect their predominantly youth centric customer base. but also expect an increasingly strong Verizon Wireless handset line up to compete strongly.

The impact on Quick Messaging Devices is in my opinion likely to be modest

  • as a traditional qwerty remains overwhelmingly the input of choice for heavy messengers in the US although there is definitely room for lowering the $10 mandatory data plan on featurephones

Family data plans and data plans which allow access across multiple devices are in the pipeline

  • but will probably not make an appearance until 2012+ as part of LTE offerings.

From a device vendor perspective, the move to lower priced iPhone plans is likely to put further pressure on vendors like LG who have yet to make a credible offer in this space as well as RIM who will find more competition in the consumer space.

The lower pricing on data plans will be music to the ears of ambitious new entrants like Huawei, ZTE who plan to bring mass market priced devices to the US & Europe. The lower TCO of smartphones as a result of downward pressure on service prices boost their addressable market.


March 24, 2010 14:03 telliott
Around the dawn of time – that is, 2004 or so – wireless religious wars raged, and an attractive WiMAX mythology got started. WiMAX was the Rebel Alliance against the Empire, the plucky little underdog technology stickin’ it to The Man, with his closed architectures and walled gardens. This mythology had flaws. To begin with, if “rebels” Intel, Craig McCaw, and Motorola aren’t The Man, they look an awful lot like him. And we should have kept religion out of it: it’s about making money getting bits from Point A to Point B, not about setting information free or changing the world. The proximate cause of this rumination was the announcement by Packet One, the Malaysian WiMAX operator, that 2010 is “the year of WiMAX devices.” (It’s also the year of biodiversity, according to the UN, and the year of the tablet, per Nvidia.) PacketOne will launch a WiMAX embedded netbook later this year, augmenting its array of dongles and fixed modems. And it’s this, rather than Sprint’s CTIA announcement of its WiMAX smartphone, that illuminates WiMAX’s true future. That is to say, WiMAX will make more money toting ones and zeros in places like Malaysia than in places like Las Vegas. Why? Because there isn’t much of anything else in the developing world, even in relatively advanced countries like Malaysia. Dodgy DSL and overworked or soon-to-be-overworked 3G networks pressed into service for fixed access. FTTH? Fuggedaboutit. LTE? LOL. WiMAX in its present state provides reasonably robust, reasonably affordable connectivity in the 512k to 1 Mbps range - most of the time - with user-installable CPE. Sure, they’d laugh at that in Seoul, but in Mombasa you’ll get some takers. Heck, you’ll get some in Waco, Texas. And to that point, this might be a good time to note that our modest WiMAX forecasts for emerging markets, while perhaps conservative, are generally in line with one known data point: Packet One’s 140,000 subscribers as of February. Early last year we forecast about 166,000 consumer subscribers in Malaysia by year-end 2010. A couple of other operators have finally launched, so that number will be surpassed, but not by an order of magnitude. It’s still going to be a small fraction of the total wireless subscription base. In other words, a good solid business meeting a real need. But no threat to the Empire. - Tom Elliott

January 11, 2010 22:01 David Kerr
Afte the inevitable wave of irrational exuberance has come the equally inevitable correction and flow of negative comments regarding Google Nexus One.
  • We are now seeing a huge rebound of criticisms about customer service, implementation and execution, moaning and complaining for existing t-mobile customers who have to pay more than a new customer to get a cool device and strong complaints from developers about availability of SDK and support.
  •  Naturally, the questions about Google's ability to execute on direct sales are being raised but these shall pass very quickly in our view.
Within our wireless team we had divergent opinions from network centric, application focussed and device driven analysts but ultimatlely we arrived at the following key perspectives:
  • Consensus is that Nexus will be successful by high end tier Smartphone levels (single digit volumes in 2010 but upside potential when it rolls out beyond TMO in US and to more open markets in Europe). Nexus is likely to sell more through operator channels than direct overall. Handset volume though is not the metric by which Google will measure Nexus success nor should operators as Nexus sales are a means to an end.  If Google is successful and Nexus ends up driving usage and value for operators, they will support it with subsidies.  Otherwise, operators can passively watch Google evolve its own-branded offering with little to lose. Tier One handset vendors (SAM, LG) may have the most to lose as Google’s marketing muscle and brand coupled with compelling devices and experiences will be a strong competitor for Operator slots, subsidy dollars.
  • Handset revenues and profits are a nice to have for Google. Key to their success and long term ambition is too boost the mobile browsing ecosystem. More open devices capable of browsing/search/maps from Google or others is positive for Google.  Google needed to update and get close to parity in terms of an engaging, fun, easy browsing UI with competitive links to key apps like maps, media etc and this device achieves that goal. Google is great at creating a buzz and the media is ready to talk about something other than Apple.
  • Google Nexus and indeed the whole Android approach is not about controlling/owning the user (contrast this with Apple). Google’s key metric is advertising revenue. Google's vision is well publicized: the browser is how they will deliver services, even on mobile, and apps are a stop-gap measure as far as Google's strategic vision is concerned. Google is banking on HTML 5 as their solution to fragmentation but we believe they are drinking too much of their own coolaid here and underestimating the importance of apps. Google’s key goal is to increase eyeballs and advertising.
  • Some key elements that have not been addressed which we believe are key in Google’s future evolution and will be key to watch relate to Voice and what Google does its Gizmo5 acquisition to push Google Voice into a full VoIP proposition. This is where Telcos should be most worried and where we have yet to see all the pieces positioned on the battlefiled.