Data on the go
Mobile data technology was slated to be the next big thing in the portable telephone industry. The reality has largely fallen short of expectations. Expert Klaus-Ulrich Feiler knows why.
So far, mobile data services have not lived up to the expectations of analysts, mobile phone companies and customers. Why is this?
Klaus-Ulrich Feiler, Partner, Roland Berger Strategy Consultants: The technology hype at the beginning of this millennium led to overly optimistic forecasts. For example, the market researchers of International Data Corporation (IDC) predicted earnings in 2003 of approx. EUR 5 billion in Western Europe. In reality, the companies generated only about EUR 3.2 billion. Even business customers, currently the most active customers, are taking a very cautious approach to offers. This is because data services are still too complicated, lack transparency and are technically incompatible.
In your study, "What's the score on mobile data services?", you've identified the key factors that, if implemented correctly, should lead to greater earnings. What are these?
Feiler: In our opinion, the following four factors are key: First, prices for services must be straightforward and transparent. Second, users are demanding products and applications that add value. Third, various mobile devices and applications must be compatible with each other. Fourth, we still need larger bandwidths, such as HSDPA technology for UMTS.
So far, mobile data services have not lived up to the expectations of analysts, mobile phone companies and customers. Why is this?
Klaus-Ulrich Feiler, Partner, Roland Berger Strategy Consultants: The technology hype at the beginning of this millennium led to overly optimistic forecasts. For example, the market researchers of International Data Corporation (IDC) predicted earnings in 2003 of approx. EUR 5 billion in Western Europe. In reality, the companies generated only about EUR 3.2 billion. Even business customers, currently the most active customers, are taking a very cautious approach to offers. This is because data services are still too complicated, lack transparency and are technically incompatible.
In your study, "What's the score on mobile data services?", you've identified the key factors that, if implemented correctly, should lead to greater earnings. What are these?
Feiler: In our opinion, the following four factors are key: First, prices for services must be straightforward and transparent. Second, users are demanding products and applications that add value. Third, various mobile devices and applications must be compatible with each other. Fourth, we still need larger bandwidths, such as HSDPA technology for UMTS.
Karl-Ulrich Feiler
Why aren't mobile telephone companies pursuing this more rigorously?
Feiler: Mobile telephone companies can largely control the value chain for voice products. However, in the case of data services, the decisive components (i.e. the applications) are supplied by third parties. Most of the providers have not yet fully adjusted to this.
What can mobile telephone providers do better?
Feiler: Mobile telephone providers need to concentrate on their traditional core competencies. These include continuous worldwide availability and connectivity to all services and mobile telephone users, providing the necessary bandwidth and ensuring the quality of services and billing. They need to open their platforms and use the creative potential of partners. For example, they could provide a central platform and start a competition of applications, as Microsoft and Docomo did.
Feiler: Mobile telephone companies can largely control the value chain for voice products. However, in the case of data services, the decisive components (i.e. the applications) are supplied by third parties. Most of the providers have not yet fully adjusted to this.
What can mobile telephone providers do better?
Feiler: Mobile telephone providers need to concentrate on their traditional core competencies. These include continuous worldwide availability and connectivity to all services and mobile telephone users, providing the necessary bandwidth and ensuring the quality of services and billing. They need to open their platforms and use the creative potential of partners. For example, they could provide a central platform and start a competition of applications, as Microsoft and Docomo did.
Read the full study
Do you see any indications that mobile telephone providers are going to do this?
Feiler: Yes, but only slowly. Mobile telephone providers often think in terms of customer "ownership." However, no one owns the customer. Providers have to share the customer. The respective operator that has the best offer on a certain technology will get a share of the customer's business.
Many mobile telephone providers are also thinking too much about how they can stifle new technologies – HSDPA technology now also "threatens" to provide customers with voice-over IP. However, time and tide wait for no man. Instead, mobile telephone providers need to consider how they can use new technology – especially to win and retain new customers.
This interview first appeared in Manager Magazin on 7 December in its original language, German.
If you have questions or comments, please do not hesitate to contact us:
Feiler: Yes, but only slowly. Mobile telephone providers often think in terms of customer "ownership." However, no one owns the customer. Providers have to share the customer. The respective operator that has the best offer on a certain technology will get a share of the customer's business.
Many mobile telephone providers are also thinking too much about how they can stifle new technologies – HSDPA technology now also "threatens" to provide customers with voice-over IP. However, time and tide wait for no man. Instead, mobile telephone providers need to consider how they can use new technology – especially to win and retain new customers.
This interview first appeared in Manager Magazin on 7 December in its original language, German.
If you have questions or comments, please do not hesitate to contact us:
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