Smartphone adoption threatens operator profits

Posted by Wendy van Meer

Operators have spend millions in promoting smartphones and services in the past years and customers have finally started to adopt smartphones in big numbers.

Fantastic news for operators?

Not completely as a recent study carried out on 1,000 UK customer claims that the strong uptake of smartphones threatens to damage the profitability of operators.  The combination of expensive subsidies, flat rate data tariffs, complex service set-up and the high cost to support means that it can take up to 16 months for an operator to breakeven on every new smartphone user.

Almost a third of consumers experience difficulty setting up email and 21% struggles to set up internet on their device. Customers need help and the operator is spending a lot of time and money supporting the customers as resolving smartphone issues takes on average 30% longer than with feature phones. A large group is struggeling with the advanced functionality of the smartphone and is defaulting back to the more familiar voice and SMS phone. Operator’s margins can quickly erode because of these factors.

So what’s next for the operators and what is their plan to increase profits? I my opinion the device manufacturers and operators need to design their products and services around the end-user. Making the products and services easy to use for their customers, question is if they have the capability and competence to turn this into reality……

Source

This entry was posted on Monday, May 3rd, 2010 at 10:30 am and is filed under Analysts, Hardware, News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.