Speakers’ Corner: Chances of mobile

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I don’t know about you but I’ve always viewed ‘mobile’ as the Marmite industry of the world…. you either love it or hate it. Those in the industry either stay around for a long time because they thrive on the pace and the pressure to produce the same “strong” results as previous years, or they leave after 10 minutes because there is a far easier life to be had elsewhere.

But for such an apparently dynamic industry you can’t help but feel it holds the world record for scoring the most own goals. Take day one for instance. We clearly did not feel we had anything of value to sell as we felt we needed to subsidise everything to attract the customer in the first instance – i.e. give it to the customer for free. It is like the electricity board offering to wire your house for free if you agree to use their electricity. If that wasn’t bad enough, we then decide we will actually pay you (cashback) to take the phone for free.

The fact 80 per cent of the population should not have a free phone was ignored as the networks were happy to play the averages game. But it didn’t seem to matter between 1985 and 2000 as it was one massive wave of growth. As long as you grabbed hold of the surf board as it went by then you were going to be part of that success. In a nutshell, if you just turned up you were going to do well.

That’s not to take anything away from the John Caudwells and Charles Dunstones of the world, as they clearly saw what could be achieved by being an excellent surfer. But the bottom line is we have been in the world’s easiest sales industry where we actually pay the customer to take something for free.

So what’s changed? Well quite simply, it couldn’t continue. The City became convinced it was all about volume regardless of the profitability of the customer. It became an industry with little commercial sense. In what other industry would a primary provider pay such a sum for an operating licence, in the way networks did in our sector. Those fees represent 30-year-plus paybacks for the networks. It’s not a coincidence we are an industry that holds the records for largest monetary acquisitions and write downs in corporate history.

We went through a consolidation explosion towards the end of the 1990s, where analysts told the networks to “hunt or be hunted”, which sparked a frenzy of networks being purchased by others, usually at far from accurate commercial valuations.

Unfortunately for them, the whole mobile offering has rapidly become a price driven commodity with one big problem – everyone believes it should, literally, be for free. The net result is tariffs continue to be driven to all-time lows.

So what about the future? First the good news. The mobile device will become the ‘remote control’ of life. It will quite simply touch everything we do. The bad news is that selling the device, and the basic network connection to power it, will not be enough to survive, let alone be successful. For an example of the good and bad news it’s useful to have a look at the TV industry.

Fifteen years ago, the most we paid for a TV was £50 per year – the cost of a licence, as it was then. So why is it that now we are happy to pay £500 per year for the same box in the corner? It’s because of what is in the box. Content. Because if we can have what we want, when we want and how we want, then we don’t mind paying for it.

But the bad news for the TV manufacturers is that there isn’t much money in selling the boxes. In the same way as TV, it will be the content that goes into the “box” (the handset) that will shape the future of the mobile  industry. There are three influential screens in our lives – TV screen, computer screen and now the mobile phone screen.

To determine the most influential screen, ask yourself how many times each day you look at your TV, computer and mobile phone. I would be amazed if your mobile isn’t the clear winner. In fairness, the mobile phone does have the advantage, because every day it increasingly possesses more elements of both TV and computer.

But that is exactly the point. We have absolutely reached the Model T Ford stage of the industry – everyone now has a mobile phone. So now we can get on with the really interesting bit, of what you will be able to do with a mobile phone in the future.

Full article in Mobile News issue 441 (June 15, 2009).

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Keith Curran is founder of Yes Telecom, Vodafone’s service provision business. He is also a veteran of BT Cellnet, Panasonic, the Caudwell Group and Cellstar. Presently, he is director at mobile marketing company MavCast, mobile payment service Contact Secure and number generation business Name Your Number. He is expected to return to the mobile sales channel also.

 

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