The forbidden fruit handed over by the Serpent - to eat it or not to eat it?
[+] The complicated relation between the telecom operator and the handset market
Let's make one thing clear first: the core business of telecom operators is to sell phone numbers. No matter it is mobile or landline network, operators may collect money by just printing phone bills as long as they sell phone numbers along with the related tariff to consumers.
However, phone numbers and tariffs are invisible. Fortunately telecom operators can focus on different market segments according to the appearance and price of the handset which is more visible. Therefore, operators inevitably have to depend on the handset business to sell their phone numbers.
That, however, does not mean telecom operators have to be handset manufacturers or distributors themselves. In the former case, operators must make handsets themselves; while in the latter case, operators must procure handsets themselves and resell them to consumers.
The advantage of selling phone numbers is, as these are virtual products, there's no need to worry about the inventory. With handsets, however, it is a different situation. In addition to buying a lot of handsets with big money, there are also a lot of other headaches including inventories, marketing plans, maintenance and losses resulted from the depreciation of the phones.
In order to reach the scale of business, there occurs a room of existence for handset distributors. With their own stores or franchised outlets, they sell handsets together with the phone numbers of telecom operators. So both players have their own work to do, and telecom operators do not have to "raise cows to drink milk".
Since the main business of handset distributors is selling mobile phones, they could sell the phone numbers of any telecom operator at the same time and be loyal to none. Without an effective control over those distributors, it is hard for operators to extend their brands, which is especially bothering in the time of the mobile value added service.
[+] Distribution channel reform as a result of the development of the value added service
As traditional handsets are used for phone calls only, sales staff does not need to make detailed explanation. For the mobile Internet and other value added services, however, such explanation is necessary. But distributors would rather sell products that do not need much explanation to deal as soon as possible. That is why the value added services of telecom operators have been unable to infiltrate into distribution channels.
Yet it is a different case for the marketing of mobile phone numbers in Japan, where mobile Internet is a mature service. In order to market their mobile Internet service brands, telecom operators are directly involved in handset manufacturing and specification development. All the products of handset manufacturers are bought by telecom operators, who would then resell them at their own stores.
The advantage of that business model is, with tailor-made specifications especially for a telecom operator, handsets could be fully integrated with the services of content providers, allowing better user experience of value added services. In addition, by selling the products at their own stores, the operators could request their sales staff to provide more detailed explanation.
In Europe and the United States, where the mobile service is not so convenient as that in Japan, similar business model is employed. Telecom operators purchase handsets first and resell them at their own stores, instead of through distributors. Obviously, with the advent of 3G, the telecom operator will get involved in the handset manufacturing and distribution more deeply, or "be forced to raise cows".
Yet we should not forget that the core business of the telecom operator is always printing phone bills and collecting money (of course, there could be the issuance of prepaid cards, too). Should a great invention occur one day that make it impossible to increase the amount of payment on a phone bill, operators would loose their interest immediately.
[+] Smart Phone is threatening the business of telecom operators.
Driven by the high gross profit, handset manufacturers around the world vow to introduce more smart phone models. That is indeed a trend. Yet in the long term, a conflict of interest with telecom operators is inevitable.
Internet access, of course, is a must-have function of all smart phones. In the future, users might use their handsets to access the Internet and, whereby, to make VoIP calls. With the open architecture of the smart phone, anyone could write and install a VoIP program like Skype into his/her phone.
Everybody knows that VoIP is very cheap. Although currently, the mobile Internet accessing service is enabled through the GPRS network, the tariff which charges by packet is still high. Obviously, making VoIP calls through that way is not an economical choice. However, in Japan, the 3G mobile Internet service is charged by monthly fees, instead of packet. The Mobile VoIP now seems only a matter of time.
Even the revenue of mobile portals will be affected. In addition to the communication fees charged for mobile Internet service by packets, users should pay additional "content fees" for downloading pictures, ringtones or games. Operators would collect the fees through phone bills and then share them with content providers.
Currently, mobile portals are operated by telecom operators themselves. As handsets of specific models are bound with a portal, consumers will access the portal for most of the time. In that situation, content providers are vying to get into those portals to expose themselves in front of consumers.
The smart phone, however, is quite different. Take it as a PC with an open architecture: enter a URL address, and there you are. The portals of telecom operators are only one of the thousands of options. No more advantages of monopoly, content providers can now contact directly with users, instead of through telecom operators.
[+] Back to the standpoint of consumers
Concluded from the above, the smart phone will reduce, instead of increase the amount in a phones bill that telecom operators deliver to the subscribers. The mobile operator will face the challenge of the IT sector and gradually loose its monopoly status. Will the smart phone be the first gun to shoot for the liberation war?
Now that telecom operators are relying more and more heavily on and tightening their control over handsets. Is that a sweet poisonous pill? Shall they take it or not? Or is that a road leading to an unknown destination and rewarding those who follow the trend first with the favor of consumers?
2005/01/30 - By Digitalwall.com - Way to
China Internet/Telecom )
- Read More
Prev : Smart Phone (2) Who is the User?
Next : Media, Community, and Blog (1) The Beginning of the Story
- Today in History
Smart Phone (3) Attitude of Telecom Operator - 2005/01/30
Posts
No comments:
Post a Comment