i-Witness

Brands and service providers should look beyond network access

March 16, 2006

There is a distinct differentiation between multimedia and network service providers in the developing and developed countries. While both blocs continue to have under-served areas within their respective countries, the former keep their sight on rolling out telecommunications infrastructure, and the latter focus on providing solutions to emerging communication needs, which see a rapid change in digital lifestyle.

The business case behind this lifestyle change is the convergence of information and communications technologies. Leading brands in the world, the First World to be exact, have been swift in tapping into this emerging trend, and come out with new gadgetries, applications and lifestyle solutions to excite and humour the digital generation. Some of these big names form strategic alliances to tap into each other’s strengths and dominance in the life of their respective end-users. Novelty, an oft-tried and perishable form of trapping customer loyalty, has been rudely replaced by old paradigms honey-coated with new flavours. Buzzwords: Mobility, Innovation, and Day-to-Day Problem-solving.

For most of us in the productive generation, we are living in a world signified by Blackberry, 3G, blogs and Google search. Our lifestyle has become an undetachable part of the big rat-race. We need information on the tap to make informed decisions in business and in privacy, incessantly. Solving day-to-day problems and myriad challenges, both in the office and at home, is now a lifestyle by itself. So much for digital generation, you may say.

But that’s precisely the business case for the Big Brands and Digital Lifestyle Solutions providers.

Ever thought of having a blogging tool built into your mobile phone? Recently, Sony Ericsson Mobile Communications announced that it is to integrate into Sony Ericsson mobile phones preloaded with the relevant software that features Blogger.com and Google Search, two assets owned by Google Inc.

The rub-off is that subscribers of Blogger.com will soon be able to update their personal blogs from mobile phones. It is a fact that blogging has experienced exponential growth over the last few years – I know this well as I have been blogging religiously for the past three years – and the digital generation, aka information consumers, are decidedly turning to the Internet as a means of receiving and sharing information and images in personal blogs.

Hence, marriage is made in heaven for bloggers and their mobilephones. Built-in camera just made it even sweeter.
Check out Sony Ericsson’s K610 (the 3G model), alongside K800 (3G/GPRS Dual-band) and K790 (EDGE Tri-Band), which come with integrated 3.2-megapixel digital cameras with autofocus, flash and new imaging technology. With Google search functions built-in, these Sony Ericsson models may herald the day when Google search engine is the standard search engine for all Internet phones in the future. Already, Vodafone and Motorola have also announced that their phones will use Google's search tool. That’s besides earlier innovations that has already made a mobile phone a Walkman.

Riding on the roaring success of iPod + iTunes portfolio, the Apple took personal computing a step closer to digital nirvana recently. After introducing the range of personal computers with Intel processors that are much faster than the previous PowerPC G4 processors, the new frontier is in the arena of competitive compact entertainment solutions. With the new Mac Mini, the user can connect it to a TV, complete with other Apple supremacies -- a remote control that commands Gigabit Ethernet, Wi-Fi, Bluetooth, DVD burner, enhanced Front Row software with Bonjour file sharing and streaming, and some robust display options for better image and graphics output. Hey, since when had a PC become a powerful entertainment hub with a mid-range pricetag?

On the other hand, the grand nanny of personal computing, Microsoft, is not letting up and it recently joined the ‘Me Too’ bandwagon to announce the Origami Project. As specifications are scarce, we could only rely on media releases to learn about the Origami, which means the art of paper-folding in Japanese. Geek pundits called it a handheld "ultramobile" PC that's also a media player (iPod-wannbe?), a PlayStation Portable (PSP), and a Tablet PC rolled into one.

Call that convergent digital lifestyle? Precisely.

You know this better than me, but let me repeat. The digital trending is pointing to a new world of demographics and psychographics that old paradigms in marketing can hardly survive. Consumers’ wants and needs have been distorted with chaotic bursts in changing tastes and personal preferences. My admiration and respect for Sim Wong Hoo remains intact, but why is it that Creative Technologies’ early leading edge in soundcards and media player markets was only to be displaced by iPod’s dominance?

That’s the same question I want to ask strategic planners in the local mobile network who thought 3G is all about video-calls and watching CNN and Bloomberg on the handset. Think out of the box, guys!

Posted by Jeff Ooi at 04:22 PM | Permalink | Comments (0) | TrackBacks (0)

Operators shouldn’t repeat the mistakes they did 5 years ago

March 1, 2006

By now, Malaysia would be seeing more than two licensees given the blocks of 3G spectrum to operate the third generation cellular networks, and the market place should see keen competition in play.

The rollout of 3G services in Malaysia is like a jumbo-jet stuck on the runway, lots of power-hype but you don’t see it take off and fly. More than two years had passed after the licensees and blocks of spectrum were issued before Celcom could roll out its 3G services in May 17, 2005, in conjunction with the World Communications Day. Maxis, the market leader for 2G GSM, followed suit and launched its 3G services a month later. However, take-up rate in the last eight months has been lukewarm with less than 100,000 subscribers.

Why didn’t mobile users warm up fast to 3G? Suffice to say, this is not uniquely a Malaysian problem. Apart from Japan, 3G has seen the same lacklustre in Europe and Asia, particularly the region seen as holding the highest market potentials for 3G.

In my radar screen, I noticed two major blunders that caused this slow market up-take. Firstly, the consultants had sold 3G like snake-oil salesmen do their trade. Secondly, the network operators did not understand 3G and its target audience.

When the prototype for 3G networks and handsets were introduced some four years ago, the consultants took apparatus performance within the lab conditions as the lowest common denominator and sold it hard. The first wave of hype was built around the broadband that 3G was supposed to deliver, and 3G was instantly associated with easy multimedia streaming for Girls, Games and Gambling, followed by Music and Movie.

That was not the case. Even today, throughput bandwidth for 3G could barely reach 384kbps outdoor stably. Consumer behaviour also indicated that people don’t find it a pleasant user experience to surf porn, watch soccer goals, play network games and throw dice on that 2.5-inch screens that come with short-lived battery.

There are to date about 100 3G operators in over 40 countries world that offer 3G services prescribed by those snake-oil telecommunications consultants. If you look at their business models, communications campaign plans and real case studies, the operators were equally clever by half. Some had marketed 3G the same way as 2G and GPRS, that’s a combination of more voice and a little data. The gameplan fell flat because 2G and GPRS users found themselves no necessity and incentive to upgrade, if it’s ‘more voice and a little data’ that all they need.

Some operators who have 3G networks but short on content, for examples several notable players in Europe and Hong Kong, and Maxis in Malaysia, had taken the easy way out by launching 3G data card. In other words, it’s an alternative to surfing Internet on WAP and Web channels. Nightmare followed. In countries like Malaysia, where SIM-lock is disallowed, operators discovered that not all WAP and Web sites could render well in graphical user interface (GUI), as there is a diverse array of handsets running on rival operating systems.

Then, there is the fundamental issue of customer profiling that matches with the right content mix.

Most 3G operators have discovered the textbook mantra that there are two sets of target groups for early 3G uptake, namely the early adopters and the innovators. Early adopters are usually the young gadget freaks and those suffering the ‘kiasu’ syndrome and who would change their handsets every three months when there is a new product launch. They make up some 15% of the existing mobile users, who may have the money for the hardware, but not the consumables, the minutes and account credits. The innovators, on the other hand, are the professionals who may be discerning about technology and the related benefits. This is the ideal group with the deep pocket and revenue-generating usage behaviour for the operators. But they are in their small minority.

You see, the window for the mobile operators to convert their captured customers is rather narrow and the acquisition costs, for example the subsidy for the 3G handsets, are relatively high. Then, comes the first nightmare – 3G content and content mix.

A recent survey shows that people don’t use 3G to watch CNN or Bloomberg as they could get the programmes live, and sometimes free, from other media. These 24/7 cable news are only hotly streamed onto the users’ handset during important breaking news which, by the economics of telco revenues, are rare and few apart. In other words, 3G operators need more killer programmes to induce that habitual, daily downloads from among the subscribers. So, where are those killer programmes and programme genres?

I have some clues but I have no business in offering them for free.

Posted by Jeff Ooi at 08:11 PM | Permalink | Comments (0) | TrackBacks (0)