Wireless Informatics Forum

Just how hard the economic downturn is hitting the mobile industry depends on who you speak to. Certainly, on the front line the handset manufacturers are battling with a new age of austerity that has seen many consumers reign-in the frequency with which they upgrade their handsets. Nokia, in particular, has seen quarterly sales fall below 100 million units for the first time in two years. It also lost 3% market share during the first quarter of 2009.

At the other end of the spectrum, more than one mobile network operator (MNO) has tried to appease shareholders by claiming that the industry is largely recession-proof.

Obviously, that statement is not entirely true, even though as an industry it’s expected that telecommunications will fare better than most, the rationale being that a) consumers will not dramatically change their ‘usage’ patterns b) communication has embedded itself as a core component in Maslow’s Hierarchy of Needs (Love/Belonging) and c) post paid contract users are signed into 24 month subscriptions, assuring the service provider a relatively secure cash-flow forecast.

On a more strategic level, much of the industry’s ability to remain buoyant is thanks to the critical intersection of technologies, standards and services that has occurred over the last 12 months. Touchscreens have kept us excited about handset form factor, application stores have promoted a move to broader mobile application adoption, mobile broadband has allowed the MNOs to leverage their network assets outside of the handset and the launch of Android prompted the market’s leading OS provider, Symbian, to take the leap into the world of open-source.

Importantly, while all of this helps to maintain the industry, the combination of these intersecting developments and an economic downturn can do nothing but shake-up the establishment. Where MNOs sat comfortably at the centre of the mobile ecosystem, power is quietly being diluted across a more horizontal powerbase, with end-user revenue being shared with software and service providers such as Apple and Google, and even smaller third-party developers who, just two years ago, would have been challenged to break-down the walled gardens being operated by the MNOs.

That’s not say that MNOs are on the fast track to becoming the dumb-pipes that so many predicted. Even if they can’t rule the mobile internet with an iron fist, MNOs still have core assets that, correctly leveraged, will ensure their ‘value-added’ survival and differentiation against the global brands of Google and friends. Not least is the billing relationship held with the end-user and the control of the SIM, a core component in any trusted transaction or requirement for ID management.

The topic of industry resilience to economic conditions was raised at a recent panel discussion I attended. Unlike most conferences, seminars, roundtables etc, populated by members of the industry with their own self-protectionist agendas, the answers given were candid, honest and extremely insightful; especially those from Ben Verwaayen, CEO Alcatel Lucent and Jean-Pierre Temime, Head of Strategy for France Telecom’s Enterprise Communication Services whose comments caused spontaneous applause from the audience.

Hosted by Gemalto at a private event in France (26 May 2009), the panel comprised Jean Louis Mounier, Senior EVP Innovation & Service Factory, SFR, Olivier Piou, CEO Gemalto, Jean-Pierre Temime, Head of Strategy for France Telecom’s Enterprise Communication Services, Ben Verwaayen, CEO Alcatel Lucent and Michel Combes, CEO Europe Vodafone Group.

Here’s a selection of key comments / soundbites offered by the panellists.

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Ben Verwaayen, CEO Alcatel Lucent

“There is no less appetite [for end-users] to communicate in a recession”

 

Michel Combes, CEO Europe Vodafone Group.

“There is a pressure on revenue, not on usage. The industry is of course affected; it is resilient but not immune. For example, there is a tangible decrease in roaming traffic as businesses cut back on international travel.”

 

Olivier Piou, CEO Gemalto

“In the west we tend to think only of the first 300 million users; the high-end users. What should be of more interest now are the other 3 billion. They have very different requirements for handset features and operator services. In India one of the key features on a handset is the flashlight. It’s invaluable in rural areas with no street lighting.”

Jean-Pierre Temime, Head of Strategy for France Telecom’s Enterprise Communication Services

“As an industry we are not very good at pushing through new services. After three years of hype there is still very little in the way of mass-market adoption of mobile TV, M2M, contactless transactions and LBS.”

Ben Verwaayen, CEO Alcatel Lucent

“There is no problem with technology. Instead there is a desperate need for business models that customers appreciate. We have trained customers for free a internet. Consumers are used to paying for access not for services. It’ll be hard for anyone in the industry to change this behaviour”.

Ben Verwaayen, CEO Alcatel Lucent

“Let’s be honest, who would win a battle of the brands between Apple and SFR? There are some key things that mobile operators need to start leveraging in order to differentiate themselves, because brand is not enough.  In particular a) Trust / ID Management – the SIM is the core element in the chain for ID management and it’s a trusted module. The mobile operator has complete control over this entity; b) Billing for micro-transactions – the existing billing relationship between mobile operator and consumer is unique and highly conducive for commerce.”