Mobility

December 8, 2006
Mobile Circa 2010: Technology at its best!

Geetanjali Babbar

NEW DELHI -- Asia has become the engine for the industry's growth and innovation. Major decisions about design, price and features cannot be made without a deep understanding of consumer behaviour. According to a recently published report by The Boston Consulting Group, 'Future of the Mobile Handset', Asian players may soon sell more handsets than their Western counterparts. Samsung, which makes huge investments in brand promotion and R&D, is the leading high-end player, while BenQ intends to push into the broader, branded market.

3G to fuel mobile growth

A report from TelecomView projects that 3G will have more than 300 million subscribers and generate more than US $200 billion in revenue in 2009. The technology will help maintain the strong momentum in the mobile market, particularly in the most advanced countries.

The report identifies that declining voice ARPUs will start eroding mobile revenues. Without a strong shift to data services, the mobile carriers will experience a significant revenue decline. 3G data revenue will more than overcome losses in voice revenue. In fact, the report predicts that 2G subscriptions will start to decline after 2007 as subscribers move to 3G services. 3G will let the operators transition to a data-based service and will enable the network convergence that will bring new efficiencies and attractive new service models.

As per the IDC India Mobile Handset Usage Satisfaction Study 2006, integrated digital camera, FM radio and speaker phones continue to remain the features that are most likely to drive up-gradation of mobile handsets along with MMS. Features such as tri-band, Bluetooth, infrared port have also observed growing demand, but are yet to develop any mass appeal. These value-added handset features are yet to become mainstream for all the existing handsets, though for a large proportion of handset users, some of these features are 'must haves' while buying their next handset.

According to Parijat Chakraborty, general manager, IDC India, this trend can be attributed to a "more for less" wave in the Indian consumer market. "The costs of these features in mobile handsets are coming down rapidly with competition and technological development. Therefore, the otherwise 'advanced' features are becoming must haves for common cell phone users even if their regular needs and lifestyle do not justify these features."

It would be interesting to observe the actual usage of these features by these aspirants in future. Chakraborty is however not expecting any major change in the usage pattern of these features in the hands of common Indian cell phone users. Features that are seldom used by the big majority of mobile phone users, such as Reminder, Scheduler, Organiser etc., have been observed to have lost their shine and saliency over time.

According to the IDC India Mobile Handset Usage Satisfaction Study 2006, Sony Ericsson left behind all other mobile handset brands to grab the No. 1 spot in the handset user’s overall satisfaction, even though the brand has a very low overall market share. Nokia, LG and Samsung followed closely at the number one, two, three, and four, respectively. However, the major handset brands have all witnessed improvements in their satisfaction scores compared to their ratings in last year's (2005) study.

The study also reveals some interesting facts on the mobile handset usage front. On average, a mobile handset is used for less than one hour in a day for voice communication (incoming and outgoing calls) whereas it was more than an hour a year back. According to IDC, reduction in voice usage is due to an increasing number of subscribers being from low spending market segments such as workers and students. On the second most commonly used service, SMS, usage of SMS has increased as compared to last year. An average SMS user sends six messages in day, while the number of messages received is slightly higher, at eight per day. This is due to a number of messages from mobile service providers giving information about various downloads like ring tones, bill related information and various contests. The other reason is the messages received from public utility services such as banks, railways, airlines etc. "The overall increased usage of SMS can be attributed to reasonable tariff charges and widespread usage of SMS by TV shows, public opinion polls, etc.

Samsung bets on 4G

Vendors are still somewhat clueless as to which technology is likely to dominate in developing features for next-generation handsets. KiTae Lee, CEO of Samsung, stated: "Converged devices will dominate, but to pin down a particular technology is difficult”

According to KiTae, converged devices face the challenge of providing a seamless user experience between the phone and PDA while maintaining the portability and usability of a mobile phone. Alongside this, are display issues (providing rich visual data within a mobile phone size display) and form factor (maximising data usability and phone usability), among others. Lee predicted that, “the next winning technology will be the one that seamlessly integrates the past with the future.”

Samsung demonstrated its 4G mobile technology at the recently concluded 4G forum, claiming it can even deliver multicell data handovers at speeds of 100Mbps. Samsung hopes to drive the development and standardisation of 4G. Lee added that Samsung's 4G technology will be deployed in handsets by the end of 2008. The company has invested over US $100 million in 4G, which it bills as a next-generation wireless service that will replace mobile WiMAX.

Digital convergence is becoming an important part of our life. Ten years ago, the idea of fitting an entire music library in a device, the size of a packet of cigarettes was inconceivable. And today, a mobile phone has metamorphosed from a ‘Communications’ device to an ‘Experience’ device. The journey toward digitalisation has never been so promising.

According to a consumer survey conducted by Nokia, nearly half (44 percent) of respondents use their mobile as their primary camera, more than a third (36 percent) regularly browse the Internet on their mobile and over half (67 percent) expect the mobile to replace the MP3 player! Digital convergence is beginning to take shape with audio, video, camera, e-mail, browsing, blogging all merging together to create new combinations in new types of devices.

From digital mobile music to mobile TV, the future of convergence is right here for us to experience. Digital multimedia devices are truly personal, and enable people to access all applications on the move and allow them to share experiences at the press of a button. With advancements in mobile technology and multiple options available, consumers today prefer all in one function devices that offer productivity and entertainment combined in one. It is estimated that by 2008, the market for converged digital multimedia devices will touch the 250 million mark!

Going by the flow, Nokia recently announced a range of products, including the Nokia N70 Music Edition with 1MB memory, Nokia N73 Music Edition with 2MB memory, Nokia N91 with 8GB memory and the N80 Internet Edition with embedded Internet. These are dedicated music devices with a capacity to store 700, 1,500 and 6,000 songs respectively. Nokia N95, the ultimate convergence device is slated to be available in India in early 2007.

Evolution of handset design

According to H. S. Bhatia, national product group head, GSM phones, LG Electronics India, the Indian telecom market will be dominated by sleek designs and feature rich phones, which will be the governing attribute for a buyer. With progressive technology and a change in the consumer mindset, mobile phones have evolved from the “bricks” of yesterday to sleek stylish gizmos that are considered as an extension of one’s personality. The telecom industry has also been an experimenting ground for most convergence technology and will forsee a massive change in the coming few years with digital camera phones and others with bundled features ruling the market.

Ish Bawa, head, marketing communications, BenQ India, stated that convergence of product and services will be the key growth drivers for the telecom industry in the years to come. "Product evolution has been from phone to camera, music, laptop and mobile TVs. The road ahead would be to effectively utilise latest technologies. On the services front too, the technology has grown many fold. People are now using their mobile phones not only for talking but also for SMS, MMS, Internet browsing, video clippings, gaming, mobile banking, etc. All these features will ultimately drive a user to adopt convergence," he added.

Having said that, the next question is: Are Indian mobile users ready to embrace these 'not so nominal' 3G data services. Will users be willing to shell out more money to buy these 'elite' handsets in order to use these new services?

Commenting on this issue, Bhatia of LG said: "The Indian consumer is very intelligent and looks for value for the invested money. While deciding on the handset, the users want optimum mix of both design and functionality. They want their handsets to be of the latest design, which reflects their attitude. However, with the increase in disposable income and drastic fall in prices of handsets, the replacement market is huge in India. Today when someone buys a handset, he or she already has in mind what their next phone will be."

BenQ, however, is optimistic, Ish Bawa added: "Users have always been climbing up the technology ladder by getting exposed to such features. With technology and services getting more affordable everyday, such features and services will form a part of users’ everyday life."

User-friendly designs

"We don’t just relate design to attraction, but to application as well. It means that we see the size and the shape being more related to the technology that is embedded in the handset and its application. Hence, we would continuously see evolution in design in the years to come," added Ish.

These applications, which were added attractions with in mobile phones, have now become key deciding factors for customers while choosing handsets. So the designs have to be in such a way that they are more suited to these applications. The latest example of this user's ease-of-use would be BenQ E61 MP3 handset, which has its MP3 controls on the top, allowing the users to control music without taking the handset out from the pocket or cover.

Another sought-after feature is longer battery life, and smaller handset size. In a country like India where, people prefer longer conversations; tariffs are reducing; while demand for functions like music, gaming, etc. is increasing, it is essential to have longer battery life.

"As far as the size is concerned, it totally depends on the application the user has. If he needs a phone only to talk and for SMS, he would prefer small phones, but if he uses it for gaming or watching movie clips, he would prefer to have a larger screen and therefore a larger phone. However, the major challenge for mobile manufacturers is to make the phones as compact as possible, and best suited for its applications," stated Ish.

The handset market is extremely dynamic and that is the biggest challenge. "Today’s youth want handsets, which will provide them more than just the basic functions of receiving and making calls, SMS, etc. They want their handsets to be enabled with features like MP3, camera, plug and play systems, etc. With the increase in features on the handset, the pressure on the battery is much more. The demand for added features and bytes with smaller and slim looks will require additional investments in R&D," concluded Bhatia.

Mixed feelings on future features

According to a study conducted by In-Stat, the market for wireless handsets will grow 23 percent, to exceed US $136 billion in 2006. It will continue to grow, but at a slower rate, exceeding US $250 billion in 2011. To put this in perspective, if wireless handsets were a sovereign country, it would be the 53rd largest economy, right behind Ireland, but growing more than twice as fast as China.

According to the survey, consumers seem ready to embrace new features, including location-based services and Bluetooth, but only a narrow segment have interest in multimedia features and camera phones use will see a decline. The primary changes in phones over the next five years are that they will become more capable, incorporate beefier security, and be more targeted as organisations have greater involvement in the wireless service decisions of their employees. Perhaps more importantly, they will help us be safer.

Another report by In-Stat has indicated that mobile phone users have mixed feelings about predicting new handset features. According to the survey, Wi-Fi- and Skype-enabled handsets, voice activation for text input, and mapping and traffic routing features resonate well. However, few respondents expressed interest in wireless phones that could be used as a wallet for purchases, or for watching TV programs.

However, Neil Strother, an analyst at In-Stat, opined that some of these opinions will shift with time. Also, the report stated that nearly 42 percent of the respondents were extremely interested in voice activation for their wireless phones. More than four in 10 respondents were extremely interested in buying a wireless phone with built-in Wi-Fi for voice and data. However, only 12 percent had an interest in buying a wireless phone capable of receiving TV broadcasts.