The clear trend across these platforms is that value added services are tightly integrated into the platform ecosystem from each vendor with mobile operators’ entertainment, games and content services virtually non-existent. Attempts by mobile operators to provide these services to date (e.g. Vodafone Live! or Telecom T-World in NZ) have been outside their core competency and so very expensive for very little return, especially once the myriad of content partners are paid out their revenue share. Such services were targeted at lowest common denominator handsets to attempt to encourage mass market adoption but Smartphones are showing that anyone who really wants these types of services expects a great experience and is prepared to purchase a much more capable device.
Which brings us to the question that mobile operators should be asking themselves:
“How do we add real value to our customers’ Smartphone experience that they will genuinely appreciate, that differentiates us from our competitors, and that keeps these customers using our network?”
Well here are some suggestions - but it will require operators sticking to their core business and not trying to be the centre of everything that users want to do on their mobiles – that battle is well and truly lost.
1. Device ranging – customers’ appetite for the latest and greatest mobile devices is clearly growing. It is essential to really understand specific customer segments and what they want. There isn’t too much room to differentiate on devices which is why you must get it absolutely spot on.
Telecom’s recent Android launch is an example of not quite getting it right. Having not been able to officially sell the iPhone they have finally announced two Android devices, both of which miss their mark in terms of target market.
Firstly, the LG GW620 is now three generations of OS behind (Android 1.5) so won’t attract enthusiast Android users, it’s poor Exchange support limits suitability for business customers, and at $699 it is still too expensive to attract a large new group of consumer customers willing to take a risk on an unproven (in NZ) proposition.
Secondly, the Sony Ericsson Xperia X10 is a high-end Android device with a great set of hardware features but for the very hefty cost of NZ$1399 and its version of Android (1.6) is still two generations old. Sony Ericsson doesn’t have a great reputation with Windows Mobile and is unproven with Android. The type of buyers who want a high end Android over the top iPhone 3GS 32GB (and soon the new iPhone 4th gen) will demand only the latest Android 2.1 on devices from proven vendors.
[Edit May5th: The official Twitter application has just been released and it requires 2.1. SE have just announced that the X10 upgrades to 2.1 will be available in 'Q4 2010'.]
I suspect that Telecom’s objective was just to get any Android devices into market ASAP to try and restore some XT credibility and to finally be able to say they are offering genuine consumer Smartphones. But the better approach would have been to establish the category with the latest Android 2.1 devices from HTC or Motorola (who are proven and leading the US market) with great business (Exchange) support for sub-$1000. Then look to make a big Consumer play with a cheaper device for $399 or lower aimed at messaging and youth social networks after real research shows what services they are using. This would have to be supported by real investment in a campaign involving both the OEM and ideally Google.
Smartphones themselves are only part of a growing category of ‘mobile connected devices’ which also includes Netbooks and tablets. It will be even more challenging to pick the right devices in these categories for resale through mobile operator stores.
2. Network services - the standard set of services is common across all operators and leaves no room to differentiate;
- voice minutes
- fax calls and circuit switched data (rarely used)
- SMS/TXT messages
- MMS/PXT messages
- video-calling minutes
- basic voice mail storage and retrieval service.
So when the opportunity comes along to actually launch a new basic service that customers will love, it should be grabbed with both hands. The best example of that recently is “Visual Voice Mail (VVM)”. To be able to see a list on your phone of who has left a voicemail and to listen to them in any order you want to is great. And if it is from someone you don’t know, their number is listed which you can easily add to your contacts with a few taps. Even recording a new or temporary voicemail message is done on the device and then uploaded to the VVM platform, you never ever have to dial the IVR again! VVM is the biggest change to voicemail since, well, voicemail started and it genuinely blows away anyone who uses it. It is currently supported by the iPhone and has now been ratified as a standard so many more devices are coming soon which will support it.
3. Pricing plans have now become the most important part of what mobile operators provide - bundles of network services with rules around how you use them, and varying ability to monitor your usage. And this is the area where the most opportunity exists to innovate.
Some key areas to differentiate for Smartphone users would be:
- Flexibility in the plan to purchase extra services as you need them – especially data.
- A mobile operator branded handset application that lets you easily see your real-time usage for voice minutes, SMS, MMS and data. Allows you to purchase additional services right from your handset.
- Versions of On Account pricing plans with no subsidy built in so cheaper cost per month and no contract, letting you purchase your handset outright or bring an existing handset with you.
- First couple of months data usage with no out of bundle charges for data until you understand how much you need. Once users understand this then they can either modify their behavior or increase the size of their data bundle.
- Data bundles that operate across multiple devices, e.g. I could have a Smartphone and a laptop data card or netbook and be able to use one data bundle across them.
- [Added May11th: And data roaming bundles/pricing. Special bundles for usage when roaming which would need accurate visibility for the user so they can tell when they have exceeded it.]
4. Sales, set-up & support – my trusted mobile internet advisor.
Another big space to differentiate and to build customer loyalty is to offer quality advice regarding the mobile internet. The pace at which mobile internet services are developing is staggering and they are becoming increasingly powerful in assisting our everyday lives. Customers have a range of needs and there is a huge difference in the quality of experience they might have depending on what device + platform they select. There is a great opportunity for mobile operators to become their customers’ trusted advisor for using all the new mobile internet services. The following would be steps in the right direction:
- Instore sales expertise and demonstration capability – Apple is having massive retail success overseas simply from having staff who are knowledgeable and don’t treat customers like idiots. Be able to understand what customers actually want to do, give them live demonstrations of things they might want, and then help them make the best choice.
- Instore set-up – make sure customers walk out of the store with their Smartphone working for the core services that they want. A personal bugbear of mine is SMTP configuration given many people now send from multiple email addresses via multiple access networks with different SMTP servers.
- Be able to capture customer specific information (phone type, main services being used) in the operator CRM system as both Marketing intelligence but also for support staff.
- Also use the above information to continue to communicate to users about latest features or trends for their particular Smartphone platform.
- Skilled support staff who can resolve most issues over the phone and who own the end-to-end experience of customers. Manage escalations to 3rd parties on behalf of customers right to resolution.
- Training classes held in-store of an evening based on specific platforms where users can register to be notified about the next one and then come along for expert help and advice.
- Visit schools, community groups, old peoples homes etc. and give them demonstrations of the incredible services that are now possible. Let them touch and play with powerful devices.
Now a lot of what I have outlined above might not be very glamorous and isn’t about the ‘next big thing’ but does add real value to mainstream customers’ mobile internet experience. If mobile operators don’t start to demonstrate value and build trust amongst customers then they will continue the slide to bit-pipe utility status. Apple’s handling of AT&T’s 3G data service on the iPad is a chilling pointer to the future relegation of mobile operators even for the delivery of one of their own core services.
Can you think of any more areas where the mobile operators would add value to your Smartphone and mobile internet experience?
Other related posts:
Brands producing apps only for iPhone
Steve Jobs: Rock Star!
The features Kiwis miss out on with Android 1.6
Comment by Linuxluver, on 1-May-2010 17:12
I'm not surprised there are few comments. I read this yesterday, thinking...."Yeah....."....and really had nothing to add at that time...and still don't.
Thanks for the clear, detailed and - as far as i can see - well thought out analysis. You seem to have all the bases covered.
The only potential problem I can see is a tension between commoditisation of handsets / telco services leading to downward pressure on margins.....which has always proven hostile to vendors trying to differentiate on service is they aren't being paid directly for it. Users tend to be goldfish to large extent.....happily sacrificing service thinking they don't need it....and then moaning later on when they can't get it...but it's too late because it isn't there. So they slag off the service provider and move from one low-margin operator to another seeking the improved service their own prior actions have ensured won't be there.
We aren't very bright as a species. That this dynamic is more or less the norm is just more evidence of that. IMHO, of course. :-)
I buy the "donate" versions of many apps...and i appear to be among the few. A free app with 250,000 downloads may see barely 1,000 pay for the $3 donate version.....Pathetic, really. We're ingrates and dumb about it.
Comment by ald, on 3-May-2010 13:37
Great post Tim. I agree entirely on the Telecom/Android launch, what were they thinking? Getting a fringe vendor on board yet again to try and do the heavy lifting on the device front. LG are of course a huge vendor so maybe I'm being a bit harsh, but Motorola and HTC are the head and shoulder leaders in the Android field and surely should have been first out of the gates here with their latest devices running the most up to date version of the OS so customers form the best impression possible.
Comment by jonherries, on 4-May-2010 11:27
Funnily enough to echo the comment above, this is the third time I have checked back to see if there were any comments, and I was pleased to see there are now.
I agree there needs to be product differentiation (read: offering additional value), although as pointed out above smartphone market penetration is still relatively very low (whereas mobile phone penetration in NZ is >100%), as this would benefit me personally...
I suspect however, due to the nature of the smartphone market ie. higher priced, more likely to be contracted phones, with little overlap in offered devices between networks (for whatever reason), I think the value add services you describe are some time away. MSPs (an acronym for Mobile Service Providers I think I just made up) don't have to compete as their offerings in this market segment are almost an after thought. People don't go out wanting the best smartphone for the xt or vodafone or whatever network. They do go out and want an iphone, and hence a determination that they get it on a contract (most people I presume do due to lower upfront cost - the marketing works), and hey ho it happens to be vodafone that offers this.
I think what will drive the development of competitive add ons or smartphone network offerings in the future would be going to buy an iphone and having both networks offering you a contract for it, with similar baseline characteristics in their networks.
We currently see this in normal phones texting and voice calls now there is the ability to move between networks more easily, but still this is at an infant stage, and despite me wanting this there is no incentive for MSP.
What do you think?
Comment by timmyh, on 4-May-2010 11:54
@jonherries - thanks for your comment.
I guess I was looking at the situation when both MSP's (mobile operators) have a similar line-up of devices, which is the situation overseas.The situation in NZ regarding the iPhone is unique and the U.S. is the only other country that has only one official reseller, and that is due to historical reasons and there only being two GSM based networks (AT&T & T-mobile) with T-mobile using a very unusual frequency - 1700MHz.
Ironically in the U.S. Apple's desire to produce only one handset variant worldwide has meant they are not supporting CDMA and the U.S.'s best coverage network - Verizon - uses CDMA, so Android devices are coming out now on all U.S. networks and of course they are promoting them strongly to compete with the iPhone on AT&T - leading to strong Android growth.
Telecom and Apple will eventually sort out their differences so that Telecom can resell the iPhone, so I am looking at what would then be used to differentiate between the operators. And given the complex nature of these devices and the services then there is an opportunity to add value and be known as the 'mobile internet' network of choice.
The current in-store experience in any of the operators stores is pretty basic, with demo devices that often don't work and staff that don't understand them or what they can do.
Given the growth there is plenty of room to do something exciting here.
Comment by freitasm, on 4-May-2010 22:18
Interesting that your post comes out when 2degrees Mobile launches their own walled garden - adding practically nothing to their offering, when people are actually waiting for them to a) release adequate data plans and b) introduce a 3G mobile network.
I have the LG and the Sony Experia here, and seeing they are generations behind the current Android OS, I can only think Telecom wanted to get word out there that "we are doing something", but achieving not much really. I don't think these devices will fly out of shelves due to problems - Exchange incompatibility is one.
Comment by kiwipixter, on 5-May-2010 12:59
Sad to say, but not surprising, mobile operators are becoming more like ISPs. Their slice of the pie in the growth of smartphones and media consumption devices based around Internet services seem to be only in data usage. Also, traditional value-added services like voicemail, music and media are under threat as they will be provided by cloud providers. Cloud services and content distribution via the Internet will push the operators out of the value-added game, IMO.
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