Posts Tagged ‘handset’

It is widely believed that with the success of Apple App Stores and launch of new App Stores from all of the handset manufacturers, mobile operators have no role to play in VAS markets. (For the purpose of this article we will only look at applications that need data channel whether it is GPRS, EDGE or UMC and specifically exclude WAP and SMS type services.) The statement above has different applicability depending on the type of handsets and the markets.

The pricing for any data applications = Application subscription fee (one time or monthly) + data charges.

As long as mobile operators hold the key to data charges they will continue to have a role to play in the Mobile VAS market.

For  Android, Blackberry,iPhone,  and Windows Mobile phones, mobile operators have much less control because:

  • Generally some minimum data bandwidth is included with the basic service and so leverage of data pricing from mobile operator is non-existent
  • Users of these phones tend to be more savvy about uploading apps over the air and using it
  • Users of these phones are more likely to own a credit card; a currency for buying from App Stores

In addition, mobile operator have very little leverage in markets where:

  • Aggressive unlimited data plans have been offered like in the US where $20 buys you unlimited data plan on most phones
  • SMS spamming of users by the operator is not acceptable like in the US and some Western European markets
  • WAP portals of mobile operators never really attracted a whole lot of attention from its users like in case of AT&T in the USA

So, is there any market where mobile operators have leverage? Look at the case of a photo and video sharing application on a Nokia N Series phone. If a user uploads about 20MB worth of media a month and is charged per MB, the cost adds up and user is unlikely to use the app from Nokia’s Ovi App Store when their monthly bill arrives or when their pre-paid account dries out. This is where an operator can offer a zero rated plan and charge a fixed price for the app irrespective of the data usage.

Bottom line is mobile operators can continue to play a role in VAS markets where:

  • They can control and bundle data and app pricing in a unique way
  • When the app extends to wider phone types and choices beyond iPhone, Blackberry and Windows Mobile. Examples include Nokia Series 60, Series 40, Sony Ericsson and others
  • Credit cards are not readily available and Pre-paid is the dominant platform as operators can act as currency brokers
  • Can access and get their users to act in a cost efficient way like SMS and WAP
  • Mobile operators subsidize handsets and can bundle any app wherein discovery problem can be addressed inexpensively

So before pundits declare death of operator VAS markets they need to look at each individual market before making a generalized statement based on iPhone App Store or only the US market.

I invite you to share your experiences from different markets here for others to learn from!

R. Paul Singh


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