Monday, January 12, 2009

Mobile Zeitgeist

Sitting and thinking over the Christmas Holidays I took the opportunity to consider the state of the Mobile Industry.  Following my post asking for a Leader to step forward and create an Ecosystem that benefits all a few asked the question was Mobile a single entity or was it a number of Industries?

Whilst I agree that at present what we see might be more a kin to a medieval Britain in that what is seen are a number of waring fiefdoms I have to say that after some twenty years we might be reaching a degree of maturity that sees those that run Networks, Handset Vendors, Chip Makers, Equipment Manufactures and Regulators starting to take a rounded view that looks at the relationships between all that makes up the Mobile Industry.  As we enter difficult economic times to maintain the present position let alone move forward Leaders and Managers understand that it will require cooperation as well as innovation if mobile is to maintain its historic share of the wallet.

On a simple level I look at the talent in the industry and ask is the average IQ of those working in Mobile rising, falling or about the same as it was at the start of 2006?  Are those that are joining Mobile brighter than those that we coming into mobile in 2000 or below the standard of those joining in 2002?  At present I have to say that those I see starting a career in Mobile are not as smart as they were ten years ago when it was an exciting place.  A lot of those that joined Mobile at the time of the 3G auctions have moved onto the next hot trend, which might be philanthropic commerce in Africa and South East Asia judging by the updates of friends on LinkedIn! One of the issues that I have with those that have joined the sector is that they do not seem to have the drive that the previous entrants had to understand the history of Mobile so that can avoid the errors of the pioneers.  It might be a function of becoming Middle Aged but the current Youth do not seem to want to undertake any form of education but rather seek training so that they can perform the day to day duties of their role.

A review of the Networks sees that in Mature markets size is a good thing as consolidation sees those operating national networks seeking to become more International to share infrastructure in what looks like an old fashioned arms race.  The race seems to be one of speed as capacity fills they are looking at merging towers.  With an eye on costs all CEOs are looking at what can be undertaken to maintain profits are revenues fall.  Rationalisation in the sales channel means that no longer are the Networks prepared to speed money on acquisition but rather wish to reward loyalty. The Brave CEO  whilst cutting cost will also invest in CRM tools that improve knowledge. In the Emerging Market the CEO is faced with far greater challenges in that most of his customers have a limited budget that sees them using his network for less that 6 days a month.  The interesting thing is that the Emerging Market CEO is far more attuned to his customers needs and incentivised to insure that they have network coverage and customer service.

There is no dought that at present it is the Handset guys who are feeling the downturn the most.  The interesting element seems to be that the activity is speeding the end of life for a number of 2G handsets rather than the stalling of development.  In a recent presentation I talked about the move towards a number of standard Operating Systems in an effort to limit the cost and time of introducing handsets onto a network (just look at the pain RIM are feeling with the launch of Bold).  I see that we will have one form of Symbian (Nokia S60), LiMo and one from Windows Mobile, RIM, Apple.  Symbian’s new business model has seen the death of UIQ and the new license agreement means that Nokia have no reason to cut down is premium software stack to save money.  Whilst Android looks like a better opportunity than developing for Apple it is still a closed system that has the Networks concerned that Google is more an Enemy than a Friend.  I am sure that by the end of 2009  we will see more  devices available  on the Android platform than  iPhones but cost might be an issue should the networks decide not to  subsidise the cost of those handset.

In the Chip business it is the lag with the handset makers that will effect most and the question is who is prepared to maintain Engineers in the current market?  Those that offer simple solutions such as CSR will be the most effected and survival will mean that they need to find a bigger firm to buy them.  Those that produce chips for industries other than mobile will find themselves squeezed as costs do not match revenues.  All these facts mean good news for Qualcomm and I think that more will license the ARM Instruction set and develop chips capable of matching the speed and capacity available in today’s mobile network.

Equipment Makers face an interesting year with 3G spectrum auctioned in  India and China offering the opportunity and threat.  The staged roll out of Mobile Broadband offers opportunity to sell volume but with a limited margins.  The risk for Equipment Makers is that the Networks scale back the roll out of HSUPA and HSDP+ as revenues fail to kick in.  Looking at the future, this year we will see LTE finalise.  Losers are likely to be Nortel, Motorola and Alcatel Lucent who bet too much on WiMAX.  Ericsson and NSN will suffer as the Chinese buy market share.  Huawei will continue to impress the Networks with the quality and speed of its Engineers.

At this moment I do not think that the Industry is in terminal decline, but it is getting smaller.  I would like to believe that those in charge of the various stakeholders have the knowledge to insure that the decline is limited in terms of time and effect. Looking at the progress in America over the last year the launch of mobile banking shows that a federated approach benefits everyone.  

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