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Operator Strategies in the Smartphone EraOperator Strategies in the Smartphone Era
Alexey VolostnovAlexey Volostnov
Senior Consultant Frost & SullivanSenior Consultant Frost & Sullivan
Mobile Telecom – Recent History
3
Smartphones outselling
feature phones in
developed economies
2003 2005 2007 2009 20112003 2005 2007 2009 2011
GPRS and EDGE launch
for faster data transfers
iPhone
launches
3G nearly
ubiquitous
Feature
phones rise
in popularity
Beeline
MTS
Content ProvidersContent Providers MNO InterfaceMNO Interface OEMsOEMs End UsersEnd Users
Yesterday
Megafon
Mobile Telecom – Recent History
5
Smartphones outselling
feature phones in
developed economies
2003 2005 2007 2009 20112003 2005 2007 2009 2011
GPRS and EDGE launch
for faster data transfers
iPhone
launches
3G nearly
ubiquitous
Feature
phones rise
in popularity
Rise of the Ecosystem
Availability of Key Applications increases demand for
handsets
Increased handsets brings more developers & applications to
ecosystem
Mobile Telecom – Recent History
7
Smartphones outselling
feature phones in
developed economies
2003 2005 2007 2009 20112003 2005 2007 2009 2011
GPRS and EDGE launch
for faster data transfers
iPhone
launches
3G nearly
ubiquitous
Feature
phones rise
in popularity
Rise of Smartphones
Increasing ContributionIncreasing Contribution
MNO SubsidiesMNO Subsidies
Smartphones are the
Prime Battleground for
Mobile Ecosystem Players
Smartphones are the
Prime Battleground for
Mobile Ecosystem Players
Android
Apple
Others*
Content ProvidersContent Providers Application StoresApplication Stores OEMsOEMs End UsersEnd Users
Smartphone Ecosystem is increasingly software -centric
Smartphone Ecosystem is increasingly software -centric
Some applications compete directly with MNO services.
Some applications compete directly with MNO services.
*Others includes stores such as Samsung Apps, Blackberry App World, etc.
Today
11
Russia is the Largest Telecom Market in CEE
Mobile telephone subscriptions are projected to expand by 15.1%, and
Internet users by 18.4%, from 2012-2020 in Russia.
Source: Euromonitor, F&S
Smartphone sales in Russia,2008 - 2012
12
Smartphone Army
Q1- Q25 mln
Source: Vision Mobile, F&S
Share in mobile devices sales – 27% (revenues up to 70%)
13
Smartphone Penetration in Russia
13% of customers use smartphones
15 mln smartphones
6.2 mln mobile devices are used for Internet access (3.5 times growth)
Source: Ericson Consumer Lab, 2012
Russia – 68% average
Android
Apple
Others*
Content ProvidersContent Providers Application StoresApplication Stores OEMsOEMs End UsersEnd Users
Smartphone Ecosystem is increasingly software -centric
Smartphone Ecosystem is increasingly software -centric
Some applications compete directly with MNO services.
Some applications compete directly with MNO services.
*Others includes stores such as Samsung Apps, Blackberry App World, etc.
Today
Price is Still an Important factor for Russian Customers, But (the Right) Content and Applications Matter
Apple’s In-App Subscription Controversy
1: Apple requires companies that offer subscription applications
outside the App Store to also offer App Store subscriptions at
same or lower cost, upsetting publishers industry-wide.
1: Apple requires companies that offer subscription applications
outside the App Store to also offer App Store subscriptions at
same or lower cost, upsetting publishers industry-wide.
2: Financial Times
announces Web app,
bypassing App Store.
2: Financial Times
announces Web app,
bypassing App Store.
3: Apple revises policy, allowing
existing subscribers (regardless of
subscription origin) access to
content in applications.
3: Apple revises policy, allowing
existing subscribers (regardless of
subscription origin) access to
content in applications.
Web (or other
channel)
App Store
30% fee back to
Apple
The Mobile
Web is the
Mobile
Application
Store’s
primary
competition
The Problem
How much is a Gigabyte?
A: 500KB -1 MB
B: 3-5 MB
C: 5-10 MB
D: 10-15 MB
A: 500KB -1 MB
B: 3-5 MB
C: 5-10 MB
D: 10-15 MB
A: 500MB -1 GB
B: 3-5 GB
C: 5-10 GB
D: 10-15 GB
Customer – Centric Solutions
New services and new
service plans are not
always intuitive for
customers
New services and new
service plans are not
always intuitive for
customers
Mobile Operators are
looking for new ways to
differentiate
Mobile Operators are
looking for new ways to
differentiate
There is enhanced focus
on customer service in the
modern telecom space
There is enhanced focus
on customer service in the
modern telecom space
The New Telecom Industry
SMART LIVING
*****
SMART PUBLIC SPACE
Solar PV Cells
Virtual Shopping
Travelling Wave Reactor (TWR)
Morphing
From 2D to 3D HDTV
Urban Planning
Consumer Electronics Energy
Retail
AutomotiveHealthcare
Electric Vehicles
Biotechnology
Financial Services
M-payments – Operators and/or Banks?
M-payments global market to reach
670 bln USD by 2015
Beeline
&
Alfabank
MTS
&
MTS Bank
Megafon
&
MegaLabs
The Top Internet-Era Companies Have Been Defined by Increased Personalization
1990s 2000s 2010s 2020 1990s 2000s 2010s 2020
Source: eMarketer
The Growth of LTE – On the way in Russia
32
Source: GSA
Initial LTE Commercial Networks, Worldwide
First experience abroadFirst experience abroadCommercial LTE Networks
are expanding Worldwide
Commercial LTE Networks
are expanding Worldwide
Source: GSA
Commercial Network Service Active
Commercial Network Deployments Ongoing or Planned
LTE Trial Systems
The Sprint Example – Marketing New Technology
33
Year 2006 2007
Company
Decision
Sprint, a leader in
mobile data, chose data
as a core marketing
theme
Sprint chose not
to carry the
iPhone
Consumer
Response
Consumers were not
ready for data, and
were unresponsive to
ads
iPhone launch
was revolutionary
event for data
Market
Effect
Sprint bled customers
due to poor network
quality
Data centric
customers moved
to AT&T
Today
•Sprint stock is
below ¼ its 2006
level.
•Sprint lost its
advantage in data,
•Sprint still feels
the pain of
customer losses
in the mid to late
2000s
•The Lesson:Timing is
important!
Today
•Sprint stock is
below ¼ its 2006
level.
•Sprint lost its
advantage in data,
•Sprint still feels
the pain of
customer losses
in the mid to late
2000s
•The Lesson:Timing is
important!
The First Mover Advantage
34
22
33
11
First movers should also cater their mass-market messaging to other more mainstream services
First movers should also cater their mass-market messaging to other more mainstream services
Finally, first movers should keep a close eye on the market and adapt messaging and offerings once the market moves to the early majority
Finally, first movers should keep a close eye on the market and adapt messaging and offerings once the market moves to the early majority
First movers should build market share early among innovators and early adopters through technology availability, advances, and targeted messaging
First movers should build market share early among innovators and early adopters through technology availability, advances, and targeted messaging
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