Mobile device vendors shift focus to software
Posted by Ron van Valkengoed
Industry analyst Informa released some figures showing that mobile phone sales is forecasted to slow significantly in developed markets and will not exceed 2% CAGR, smartphones are predicted to represent the major growth area. Informa thinks revenues from smartphone sales will represent over 55% of total market value in North America, Western Europe and Japan. Looking forward, it is becoming clear that, in these regions, handset vendors can no longer rely on mobile phone sales to sustain growth. They have to look at content creation and service offerings and product differentiation will increasingly shift from hardware to software.
Market leader Nokia understands what services offerings consumers like best, a recent Nokia study on device usage shows that Email has really taken off in 2008 and demonstrates increased use of Music, Maps Browsing and Social Networking. While devices are becoming more powerful, hardware vendors push services and end users more and more use the services available to them.
An example of this is the fact that the MySpace Blackberry App was downloaded 400,000 times in 7 days. This is ~2% of all 19 million Blackberry users globally. This presents some real proof that the Blackberry user does actually want to do more than ping emails about the place.
The greatest example of this trend is the Apple App Store with an astonishing 100.000.000 downloads in 60 days. Assuming ~14 m iPhone users, this is an amazing ~7 downloads per iPhone user. Taking a neutral business case of app. revenue 10 $/user per year, iPhone Average Sales Price (ASP) of 158 $ (See Apple Annual Report), 30% Apples revenue cut, and a write off over 24 months….this nets to 10 / (158/2) * 30% = 4% additional revenue beyond selling the iPhone. This doesn’t sound as a lot…….but it is a good starting point…..bear in mind the iPhone is also a platform for Music, and Apple has grown this to 36% additional revenue around the iPod.
Of course all supply chain actors (operators, content providers, device manufacturers,…) are watching this new revenue stream and will try to claim their share….it will be interesting to see how this evolves over time.
What does this mean for TEM and the Enterprise? This is another example of how adoption of consumer services will find its way into the enterprise leading to interesting questions around how to deal with private versus business, security risks, escalating cost of mobile data, escalating end user support cost around consumer related questions, etc…….
Tags: Blackberry, Informa Mobile Devices, Ipod
Excellent point! To add to your concerns, one of the top questions is how enterprises are tracking mobile applications. Despite TEM’s stated role as a gatekeeper and administrator of telecom expenses, many solutions are unable to deal with the cost and value of mobile applications in a robust and meaningful manner. As applications and services increasingly become a larger part of the holistic value of mobility and telecom, TEM is going to need to keep up to avoid being relegated to a commoditized and fungible role.
Hyoun, you are right the focus of TEM towards cost has served well in getting market adoption and moving the market to early majority. The next wave for TEM is moving from national services to truly global service, and complimenting its services with service management. Looking even further into the future I personally regard the blending of TEM with MDM (Mobile Device Management) as mandatory for providing a full service into the enterprise….MDM adds real-time cost and service management and device side control to TEM.
I agree with both of you and want to amplify the need to evolve the definition of TEM to include MDM. From a logistics standpoint, as we move to truly global services as Ron points out, over-the-air device management should be integrated into the TEM application. This will allow for expanded inventory information from the device via OTA interrogation, application management, policy enforcement and no loss of productivity in the field (i.e. device never leaves the end user’s hands). The data security and IP issues are also addressed via this same method.
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