Strand Consult’s 10 mobile industry taboos

Many believe that the mobile industry is one of the most dynamic businesses in the world, but is that really the case? In reality, isn’t the mobile industry’s biggest threat all the taboos that lurk just behind the achievements people often talk about?

John Strand, founder and CEO of Strand Consult

It is one thing to talk about the many possibilities in the mobile industry, but if you do not also talk about the challenges the industry is facing, the lack of debate will become a divide that will prevent the dynamic development of the industry. We have spent a number of years identifying and analysing the 10 largest taboos in the mobile industry, in order to be able to help our customers increase their future success. We know the industry’s possibilities very well – but we also believe it is very important to focus on the industry’s taboos.

The 10 mobile taboos are: Revenue sharing models for mobile services – we need
to move forward from premium SMS. It is a problem that the premium mobile services market is no longer particularly dynamic and the industry really needs this area to develop more in the future. It is fine to give service providers the possibility to share revenue from customers’ purchases of various mobile services. But in many countries this revenue is either stagnating or decreasing – many people already know this but very few are talking about how new business models, bonus models, new technology and new strategies could stimulate the market.

Mobile services – how do we get consumers to change habits and purchase more advanced services? Everybody is talking about the mobile services market, but what market are they actually talking about? Are they talking about the Internet on the mobile phone and therefore free services, or are they talking about premium services like on the ring tone market, or is it something completely different? Why are people in the industry so afraid of being critical about what is being said about the mobile services market? What we need is new services that will make an increasing number of customers that are still only using voice and SMS to start using their mobile phone for more things.

Distribution – how should distribution channels be rewarded in the future, who is responsible for which areas – and why? When customers purchase a mobile telephone, a SIM card or a service, a cash flow is created. Questions like who owns the customer relationship, how should revenue be divided and which channels should service which customer segments are all important and should all be questions that the mobile industry ought to be focusing on.

The mobile broadband -business models. There are many questions that arise in relation to mobile broadband. Will mobile operators develop towards being mobile ISPs, with falling prices and increasing demand resulting in the mobile broadband business case evolving into a nightmare? Or will operators invent a number of new services that will compensate for the decrease in the price of data traffic that is already happening on a number of markets like Sweden and Finland.

The MVNO market – is it small operators or segmented distribution channels? Many people are talking about MVNOs and just as many are attempting to do business in this market. But what is an MVNO? Is it a mini mobile operator, or is it a new distribution channel using a different business model? Are the MVNOs a threat to the existing MNOs, or are they a business model that can positively influence an MNO?

Outsourcing – what are the operators’ core competencies? Around the globe, an increasing number of operators are choosing to outsource smaller or larger parts of their business to different players like Nokia Siemens, Alcatel-Lucent, Ericsson, IBM, and Accenture. How far should they go and what are an operator’s core competencies? Many people do not realise that the future mobile operator may only be a mobile licence, a billing system and a bank account with a cash flow.

Mobile payments – the future is simple, but many are trying to make it complicated. Many in the business keep on forgetting the mobile value chain and how it will develop in the future. Many mobile operators and smaller technology companies are talking about mobile payments and they all have a dream of owning that business area. But if they hope to make profits on customers using their mobile phone to pay for their purchases – they are naive. What is the real status of this market, what players are there and who will control this market in the future?

Mobile marketing – is the market significant and will it evolve as many optimists predict? There is no doubt that there will be demand for mobile marketing, but what will the mobile marketing value chain look like and how will this market develop in the future? Many people have opinions about mobile marketing, but are forgetting to relate their figures to the advertising industry and consider how large a share of this market will be used on the mobile phone.

Network technologies – we all know GSM and UMTS, but what about all the competing technologies? How will the mobile market develop in relation to CDMA, Wi-Fi, WiMAX or completely different access technologies? One thing is the technology, but there is also the spectrum and what frequencies are available.

Mobile market regulation – in many countries the regulative authorities and politicians want to regulate the mobile market. Does the mobile market really need more regulation, or will ordinary market forces create the same dynamics in the future that have so far greatly increased mobile penetration, increased the number of mobile services available and decreased mobile prices and tariffs to such an extent that a mobile phone can – in almost all cases – now compete with traditional fixedline telephony.

An editorial by John Strand, founder and CEO of Strand Consult, which analyses mobile markets and developments, publishes reports, and holds executive workshops that have helped mobile operators, mobile services providers, terminal producers and media companies all over the world focus on their business strategies and maximise return on their investments. Strand Consult is based in Copenhagen.