Jay Seaton, Chief Marketing Officer at Airwide Solutions, looks at how operators can use the unique assets at their disposal to deliver the Smartphone experience, even to those customers who dont own a Smartphone
A recent report on the European Smartphone market from Pyramid Research predicted a 22% increase in Smartphone sales in 2009 compared with 2008. This is despite an overall decline of around 21% in total handset sales, fuelled both by the suffering economy and mobile saturation.
So what is driving this growth against the overall trend? The user experience that Smartphones enable, and the excitement created by the prolific development of the app store phenomenon.
The app store numbers are staggering: Apple recently announced 1.5 billion downloads from its AppStore, with subscribers downloading more than 5 million applications per day. BlackBerry, Nokia and LG, among others, also have their own proprietary solutions. All of this offers the potential for increased mobile data traffic, but it also highlights a threat to operators. Now that subscribers are increasingly turning to, and interacting with, other service providers, the established relationship that operators have built with their subscribers is gradually eroding. There is an increasing possibility that subscribers could become loyal to a service, rather than to the operator.
For the user, the experience is the domain of the device, the applications, the operating systems and the Internet. So the mobile network operator risks potentially being rendered irrelevant. Worse still for operators is the fact that they foot the expense, as data traffic capacity increases, with uploading and downloading of pictures, video and web content, messaging, chat and networked gameplay. They also typically incur the customer service expense of applications that dont function correctly.
For years, the challenge for operators has been to avoid being just a data pipe; now time is running out and operators have to add value if they are to retain the subscriber relationships from which they have previously benefited. They need to regain control of the subscriber experience, and generate from it real revenue streams to serve as the next wave of growth, as margins on traditional services plateau and decline. To do this, mobile network operators must take the current app store phenomenon to the next level, by enriching applications with their unique capabilities, such as messaging, browsing, location, user profiling, presence information, security and charging, making them powerful, feature-rich and closely aligned with subscriber expectations. Without these moves, the mobile network operator risks ceding control and ownership of the content-driven Smartphone world - plus all the revenue that will come with it - to apps developers, device manufacturers and content providers.
This same principle can be applied to the feature phone - or non-Smartphone - market, which accounts for approximately 80% of the 4 billion global mobile users. The open source software applicable to Smartphones is ideal for app store development, and Smartphones have the capability to run on-board applications. But since the non-Smartphone majority of handsets doesnt have similar capabilities, delivery of content and services must be undertaken via a channel that is appropriate for the device, be it SMS, MMS or IM. For delivery - downloaded or streamed - of high quality music and video to non-Smartphones, content can be optimized by the operator for the device and the subscriber plan, and format, compression level and delivery channel can be tailored appropriately.
Applications connecting to cloud resources could also be a successful method for alleviating potential non-Smartphone deficiencies in processing power, battery life, and data storage. The solution to this problem lies in investment in a framework that allows services to be introduced and enhanced across existing and new communication channels, using network capabilities such as location, authentication, device detection, transcoding and charging, to provide an enhanced user experience, while preserving and reusing the underlying infrastructure to avoid any disruption to revenue-generating existing services, and intelligently address a users device through the appropriate channel.
Operators, of course, remain the dominant force within the mobile ecosystem, and they can solidify that position by using their unique assets to better effect. Location information, presence information, security for the user - including protection from spam, spoof and fraud, parental controls, user profile and preference information - handset information, transcoding, content adaptation, application and service reporting, charging and billing, are all assets the operator can bring to the table and ultimately address a users device through the most appropriate channel, with personalized and sticky content and applications.
Operators are in a unique position to enhance any application with their unique assets, improving the user experience for all subscribers, both those with Smartphones as well as the forgotten majority without, and make money in doing so.