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| Andy Tow, Avenir Telecom |
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| Bob Sweetlove, HSC |
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| Jason Laight, Romexworld |
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| Martin Stiven Orange |
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| Peter Kelly, Vodafone |
2009 has been an eventful year for most in the mobile industry. From recession, to mergers and acquisitions throughout the market, to massive advances in the technologies we use and healthy gains in consumer demand for products and services, it’s been interesting. Here, Heather McLean takes a final look at 2009, and asks heads of our industry what they predict for 2010.
There have been some really positive and exciting developments in 2009, says Sweetlove. Top of the tree is the recently announced merger between Orange and T-Mobile, he notes. “This ended months of speculation and uncertainty and paves the way for a really powerful, stable network operator to launch a really compelling customer proposition at some point over the next few years.”
Positive developments
From an Orange perspective, Stiven states: “Our planned joint venture with T-Mobile UK should have a hugely positive impact on the industry, and for customers by offering expanded and better quality network coverage, and easier access to shops and customer services.”
Adds Sweetlove: “The recent announcements by O2 and Vodafone of converged products pulling key business services like fixed line and IT onto the mobile bill point to a healthy future for those in mobile who can embrace the new product sets.”
Horsted comments: “The consolidation of the mobile industry by the potential merger of Orange and T-Mobile, and the potential mast sharing of Vodafone and O2, will mean good news for the planet and hopefully better coverage and service for the customer.”
While Stiven says: “I think the government’s increasing focus on technology holds huge potential for the country. We’ve seen an explosion in mobile data usage, which is making flexible working a reality for many people. If the promises of the Digital Britain report come to pass, the UK will be fundamentally altered and the mobile industry will be right at the heart of that, which is pretty exciting.”
Recessionary factors
Yet French states: “You can’t talk about the negatives of 2009 without acknowledging the global recession. It’s been a tough time to do business, in what is an increasingly competitive market. Consumer behaviour has changed as a result, with people becoming more cautious and selective with their spending. People are choosing phones for the long term based on the quality of their mobile experience.”
Stiven states: “I don’t think anyone would disagree that 2009 has certainly been eventful; economy, weather, you name it, it’s been unpredictable. I’d say that the mobile industry as a whole has weathered the storm well in comparison with many other industries and, if the experts have got it right, we should see some light at the end of the tunnel in terms of economic stability soon.
“I’d put this relative stability down to the versatile and everyday nature of mobile tools; they’re now an integral part of how we all run our lives and businesses. Mobile communications are no longer just about calls, texts or emails; for many people, their handset is now also their mobile office. Device choice has also extended and the development of dongles and data cards has made laptops into truly portable tools by enabling easy access to mobile broadband.”
Tow states: “The one thing I’ll remember 2009 for is just how resilient and adaptable the mobile industry has shown itself to be in the face of a severe economic depression. Diversification, consultative customer communications and continued technological innovation, from all corners of the industry, has lead to a stability that must have surprised the doom-mongers in government and boardrooms that were making their predictions for our industry this time last year.”
Yet Kelly adds: “The recession has seen a tailing off of revenue in a number of areas, balanced out by increases in others; mobile broadband, and the increasing uptake of mobile email to name but two. The mobile industry needs to address this situation by adding greater value and competing less on cost. Ultimately, by understanding our customers and delivering more, we will see contract lengths increase, benefitting all parties and providing stability for our customers.”
Damage control
There are several areas that have damaged the mobile industry in 2009, says Horsted. “Marketing claims of theoretical high speed mobile data that cannot be delivered practically have disappointed the end users and discredited the mobile market. Also, the continued smoke and mirrors surrounding bundled tariffs that hinder the end user obtaining a clear idea of what tariff they actually need is a problem. Both of these discredit the industry and undermine customer confidence. However, this approach has allowed a new type of dealer to emerge, one who acts more like a consultant.”
Sweetlove continues: “I think the biggest negative that we have as an industry is the confusion we cause customers, when they are looking to buy and upgrade network products. The same tariff can be completely different in terms of add-ons and promotions, depending on whether it is bought direct or through an independent dealer. The same applies for upgrades when incentives are provided for upgrades to be taken direct.
“Also, some products are not even available to authorised p Andy Tow, Avenir Telecom dealers of the networks. Competitive consumer terms are becoming very difficult to negotiate for dealers. Trying to explain network channel strategy to someone who has approached their local authorised dealer must be very frustrating. I’m convinced that the networks could perform many transactions for less overall outlay if they trusted the dealer channel more,” he states.
2010 will be a tough year for many, advises Horsted. “Unfortunately, I do see further consolidation of the market and the exit from the market of a number of traditional mobile dealers, as the networks continue to reduce their commissions and impose higher barriers to achieve. For some, this will be the challenge that they need to think and act differently; for other who do not face the challenge, it will signal their demise.
From a regulatory point of view, the moves by the networks and Ofcom to tidy up the dealer channel with cleansing initiatives and the GC23 regulation, which came into force in September, will ultimately prove very positive during 2010 and beyond, claims Sweetlove. He says: “This has gone a long way to strip out the rogue element in mobile, leaving behind a trusted reliable independent channel doing an extremely valuable job for the networks with typically average support.”
Revenue share controversy
Revenue share has not been well received in the dealer channel. A resounding 69% of respondents to a recent Mobile Business reader survey stated they feel that one year on from its launch, the O2 revenue share model ‘sucks’, plus a further 25% said they left O2 because of its new revenue model.
New revenue share models is an area that Laight says has shaped the channel over 2009: “The change in the way the networks pay commissions to the indirect channels has left a significant hole in dealer budgets, where they were used to receiving very high upfront payments.
“This has firstly consolidated the industry and started a round of mergers and acquisitions, but it’s clear from our side as a mobile application service provider that those companies in the telco space offering multiple products and converged solutions are winning the battle and adjusting to the change more quickly,” continues Laight.
The roll out of revenue share has made dealers far more focused on supporting their higher spend customers and retaining them, rather than continually switching them around the networks, notes Sweetlove. “There is a growing realisation among the networks that the lucrative SME community is best managed by their local independent specialist, and if the commercials and engagement policies are fair, the right behaviour will follow.”
Mobile-fixed convergence
Convergence between fixed line and mobile is on the cards, warns Horsted: “I think curiously enough, my belief that mobile networks will reduce their upfront commissions will actually stimulate the dealer market to look for innovative ways to differentiate their mobile proposition. Fixed line is the obvious way to differentiate, with a single bill and a single point of contact for the customer.”
One of the things Tow expects to see in 2010 is the blurring of some of the divisions that exist in technology and sales. “Telecoms, for example, have always been separated into fixed lined and mobile. But with the advent of initiatives such as O2’s Joined Up, 2010 might be the end of this era.
“Another example of this is in IT and telecoms convergence. This has been spoken about for years but I feel that, as of 2010, they’re not converging, they’ve converged. It’s time the industry started marketing this union as a straightforward set of customer benefits, as opposed to a futuristic upgrade path,” adds Tow.
Convergence is a strong theme for 2010, says Laight: “I think clearly the smart telco dealers are looking at converged sales opportunities to increase margins, and thus are having to change their business model accordingly. The end users are looking for added value and we have definitely identified a huge growth in smartphone sales where customers are starting to realise the benefits of delivering additional services across their mobile fleet, to increase their own business stability and growth.”
Mobile unified comms
Kelly comments that mobile unified communications (UC) has had a big impact on 2009: “The launches of our UC solutions (Vodafone One for large businesses and Vodafone One Net for the SME space) were important moments not only for Vodafone but for the industry as a whole. Now there are truly mobile centric UC solutions on the market that make it genuinely possible for people to identify what their colleagues are doing, and the most effective way to contact them, whatever they are doing, wherever they are. UC has suddenly becomes a much more powerful proposition, and one that the mobile and fixed dealers are well placed to exploit.”
Kelly predicts that in 2010 we will see a shift towards greater emphasis on indirect partners in the business market, and the growth of UC will really be the catalyst. He continues: “We’ll also see the introduction of Microsoft BPOS. UC is a very big opportunity for Vodafone to expand its business through its partners. We are already building a partner programme and it won’t be long before we follow it with a full accreditation system. As part of the journey to UC, we’ll also see increasing business in mobile applications, mobile email and secure remote access.”
Smartphones, OS and apps
The most significant trend over 2009 has to be the rise in status of the smartphone and its subsequent applications, says Sweetlove. These devices and apps have dominated the mid to high tier transactions in 2009 with the likes of RIM, Apple and HTC making a real impact, he claims. “Social networking is now almost expected on the mobile now whereas 12 months ago it was relatively unusual.”
Tow agrees: “In the consumer marketplace, ‘apps’ has been the buzzword of the year. With our B2B heads on, we’ve worked hard to provide the channel with a selection of mobile apps that deliver on both functionality and margin.”
Apps are the first major trend that spring to Stiven’s mind: “The ever-increasing proliferation of mobile applications is gathering pace for business as well as consumer users. Apps to update your CRM system, to get directions with GPS, or even to keep up to date with real time news updates, are now being widely used and are bound to continue appearing, especially now that there’s such a varied choice of handsets to run them on.” Applications and the ability to customise handsets means that consumers are enjoying a richer, more personal mobile experience than ever before, says French. He comments: “The Android Market has attracted a lot of developers and we will see further exciting developments with Eclair, Android 2.0. Similarly, Windows Marketplace continues to draw a lot of creative content. Healthy competition between the application stores will deliver new and exciting mobile applications, tools and experiences for consumers in 2010.”
2009 was a breakthrough year for the Android operating system, says French. He comments that 2009 was a year that saw the mobile industry embrace Android, as it quickly grew from a fantastic idea, to becoming adopted as a market leading operating system, rivalling other more established platforms. “Consumers experienced the incredibly powerful customisation Android brings, and the industry responded.”
Good year for all
Sweetlove states: “We’ve had a really good year at HSC. Yes, our airtime business has come under pressure from more than one angle, although I would say that our airtime market share has grown. Our hardware business has outperformed expectations and we’ve developed a far clearer view of where to take our business moving forward. The net effect is a profitable and confident HSC excited about 2010.
“Our dealer base has grown in 2009 by about 30% which is a cracking performance in a consolidating mobile channel during an economic recession,” continues Sweetlove.
Tow comments that in June, Avenir celebrated its twentieth anniversary. “It’s amazing to think how far the mobile industry has come in the last two decades. It’s gone from the periphery of business to its very heart, just as handsets have evolved from bricks and tethered car phones, to smartphones and iPhones.”
In sales at Avenir, the business has worked concertedly with its dealer base to reduce customer churn, claims Tow. “This has delivered significant results,” he says. “Also, in marketing, we’ve upped our game considerably on all fronts, both online and in print. And, on the business level, we’ve developed the Avenir story with a string of top level partnerships across handsets, laptops, mobile and business broadband, fixed line telecoms and accessories.”
Demand in mobile has declined in the UK market, states Browning. However, he adds: “Despite this, at 20:20 Mobile we have continued to grow by focussing on our key partners and on our ability to provide end to end, bespoke solutions.”
2009 has been a very successful year for 20:20 Mobile, claims Browning. “We have successfully merged 3 companies into one Group: 20:20 Logistics (handsets); Dextra Solutions (accessories); and Caudwell Logistics (third party logistics). We have re-branded the Group across the globe. We are particularly proud of this, as we implemented the re-brand project inhouse and have had extremely positive feedback from all of our partners.
“We have also launched our Premier Partner scheme for independent dealers and a new online Partner Portal to give our customers 24/7 access to important information such as product availability, order tracking, manufacturer roadmaps and market intelligence,” adds Browning.
While, for fast moving kid on the block, HTC, French says: “2009 has been a landmark year for HTC, for the company and for the brand. From its inception in 1997, HTC built a strong, global reputation as an ODM producer of whitelabel smartphones. In 2007 we took the next logical step in our evolution and launched the first handset under our own brand and we have grown tremendously in that short space of time.
“However, our most important achievement this year was the launch of HTC Sense, HTC’s customer experience that was first seen on the HTC Hero and then the HTC HD2. The level of innovation and competition between manufacturers and operators will always mean there is lots of exciting developments to look forward to. HTC has ambitious plans for the year ahead,” French concludes.
ED says:
The fact that Mobile Business is entering 2010 as part of Comms Business is further proof that our industry is growing and developing, and moving forward in a truly converged way. We’ve spoken about this for years, but according to these major industry players, it is happening now for real. So, let’s show the fixed line industry how it’s done.