Focus Pocus... Isn’t it about time we focused on customers?
by Nicki Hayes, May 09, 2002
“In the days of WAP we focused on technology. As GPRS comes of age we seem to
be focusing on shareholders. Isn’t it about time we focused on customers?” asks
WDN in the light of a new report.
UK based Analysys Research Ltd released a report last week revealing that at the end
of 2001 five of Western Europe’s 76 mobile operators had launched services based
around faster GPRS, approximately 3.3 million compatible handsets had been sold,
and about one million people were using GPRS-based data services. Now,
mathematics is not my strong point, but even I can see that this is not a sustainable
business model.
So why hasn’t GPRS got far from the starter’s blocks yet?
Well, according to Michael Minzlaff and Katrina Bond, the authors of this report, the
lack of compelling new applications and the high price being paid for data packet
downloads is to blame.
A quick look at the prices from UK operators reveals that they have a point:
Vodafone PLC currently only targets business users with its GPRS service and is
charging £5 to £6 (US$7-US$8) per Mbyte of data downloaded. Orange also only
targets business users with a range of payment options according to how much data
you download. Its scale starts as £4 per half Mbyte per month with an additional
charge of £8 for each additional Mbyte and goes up to £475 for 500 Mbytes with a
charge of £0.95 per each additional Mbyte.
And they wonder why there has been no stampede to adopt these services!
Still, all is not lost. Analysys estimates that the number of GPRS subscribers could
grow to 40 million across Western Europe by the end of 2003, if operators heed their
advice:
“It is critical that operators address all potential customer segments as quickly as
possible, and that includes SMEs and consumers as well as large corporate customers.
The sheer size of the residential market makes it a critical one for the operators to
exploit, and success in this area could mean the difference between beginning the
recovery of overall ARPU levels and continuing to see the steady decline in ARPUs
in the mobile market,” the report claims.
The pre-paid model is the way to go to win this market, according to the report:
“We predict that pre-paid GPRS will - and must - begin to play a similarly significant
role as mobile operators develop their mass-market GPRS propositions, spurred by
the success of prepaid services in the GSM market…”
It’s pretty ironical then that this obsessive focus on ARPU - average revenues per
user - is one of the main reasons why operators have not been replicating the success
of the GSM residential market’s pre-paid model into the GPRS market, even though
pre-paid subscribers account for 63 per cent of all mobile subscribers across Western
Europe. Why? Because this model makes the calculation and monitoring of ARPU
very difficult.
The operators are in a tricky position. On one hand their shareholders, influenced by
analysts, are watching the ARPU as close as the English media are watching the
progress of David Beckham’s metatarsal bone in the run-up to the World Cup
(apologies to those of you who are not soccer fans but I’m sure you get the gist). On
the other hand, these analysts are recommending a payment model that makes it
difficult to calculate this statistic.
Isn’t it about time analysts took their own advice? As always, Analysys has published
a comprehensive, well-documented report with all the right conclusions. Its
recommendations to focus on customer segments, develop customer propositions for
each and to focus on the customer experience and not the technology, are spot on.
Isn’t it about time they, and the broader analyst community, started to do the same
and move the focus from ARPU to something with a little more long term relevance?
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About the author:
Nicki Hayes is The Wireless Developer Network's (www.wirelessdevnet.com) European correspondent and the part-time judge part-time jester of its new online debate -
Holding Court. Nicki also takes on freelance writing and corporate communication projects relating to business to business internet and wireless issues and has
contributed editorial to a number of publications including Unstrung.com, Wireless Business & Technology, Guardian Online, Financial Times, Banking &
Financial Training, eAI Journal and Secure Computing.
About the WirelessDevNet (www.wirelessdevnet.com):
The Wireless Developer Network is an on-line community for information technology
professionals interested in mobile computing and communications. Our mission is to assist
developers, strategists, and managers in bridging the gap between today's desktop and
enterprise applications and tomorrow's mobile users communicating via wireless networks.
We are interested in supporting the deployment of these evolving technologies through
high-quality technical information, news, industry coverage, and commentary. This
information is provided within a true on-line community that supports developer/vendor
dialogue through message boards and user-submitted tips, articles, links, and software
downloads.
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