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European mobile business outlook between 2003 and 2007

European mobile business outlook between 2003 and 2007  
by Juhani Viherlahti

We are going to see a lot of survival economics before operators have written off their investments in the huge 3G license fees. UMTS is expected to roll out very gradually, starting with highly populated urban areas. However, analysts see strong future for wireless and mobile computing in business areas.

Yankee Group reported at the end of September in 2005 that mobile operators are seeing 3G customer growth after a sluggish start. 3G will become a more attractive alternative for European consumers and business users. The usage statistics for 3G content services are particularly encouraging, although some of these services are offered as special promotions to encourage 3G adoption.

In 2003 already 21 per cent of European mobile phone users were interested in 3G services and were also willing to pay for the services, according to the TNS Telecoms 3G report. The research was carried out in 10 countries. The majority of respondents were willing to pay up to 330 Euros for a 3G handset and an additional 6 to 10 euros per month for 3G services like emails and MMS. This price level was achieved in 2005.

Sending and receiving emails on mobile phones is the most popular activity (77%). Also videophone usage was as popular as emailing but high speed internet must wait for the 2007 teenagers. Users are interested in 3G but there seems to be a difference between men and women. When 48% of men are willing to use 3G, only 36% of all women are interested.

Unfortunately, it looks very clear that the MMS and similar applications on GPRS/UMTS - 2.5G/3G networks will not be the salvation that operators might be hoping for. SMS is simple and inexpensive and carries high profit margin for carriers. We are going to see a lot of survival economics before operators have written off their investments in the huge 3G license fees.

UMTS is expected to roll out very gradually, starting with highly populated urban areas. These areas already suffer the heaviest network congestion and probably concentrate most potential demand for mobile broadband services. The growing use of Wireless LAN (WiFi) offered in hot spots will siphon off part of the wireless data market.

Strong future for wireless and mobile computing

The market for European mobile business solutions is growing fast, but many large vendors have flawed strategies. Suppliers should focus first on opportunities in industrial applications or on product sales. Mobile and wireless technologies can improve organizational efficiency and improve customer service on the long term by 8 to 10 per cent.

Partnering with smaller and innovative mobile niche players will allow vendors to focus their business right. IDC believes that spending on worldwide wireless and mobile network infrastructure will rise by almost 20 per cent between 2002 and 2007, totaling $49 billion by 2007. Kinetic Information estimates that worldwide wireless enterprise interoperability (EIO) revenues will total over $80 billion by 2006. To cool it down, in the long term wireless Internet might finally take off and enterprises will come before the consumers.

PDA get a role in the handheld device market

PDAs will become a niche product for big enterprises, small and home offices. In the mass consumer market smart phones will outsmart PDAs. This seems to be the trend according to In-Stat/MDR market research firm based in USA. The positive sales figures in 2003 will likely be due to lower prices, improved operating systems, and a wave of multimedia and wireless functions. It seems to be so that the PDA market is not going to be a mass market, because of the increasing competition from the smartphone category.

PDAs might evolve into business tools for corporate users. Microsoft has committed to extending mobile capabilities to nearly every aspect of its business. According to Bill Gates that doesn't just mean PDAs and Smartphones, he said. It includes large-screen wall panels designed to be viewed from a distance and operated by remote control, the new Tablet PCs powered by Microsoft, Microsoft's Smart Personal Object Technology (SPOT) watches, even desktops which can interact with Smartphones. Microsoft is also targeting the rising wave of mobility solutions utilizing Wi-Fi, Bluetooth and cellular data technology like GPRS. Microsoft offers an alternative development environment to Symbian and Java phones. At the same time Microsoft should be more open in supporting other device platforms.

New niche products

Tablet PC is a niche product like PDA. It will succeed as a device where handwritten input is important. At the end of 2005 the percentage of Bluetooth devices grew from 10 percent to nearly 16 percent. Bluetooth devices tend to be the newest models on the market at high prices. While the most popular application for Bluetooth will likely remain its use in wireless headsets and in-vehicle usage, companies in and out of the wireless space are exploring new uses for the technology. Time will show if Bluetooth is going to be the next niche product, while slower but low-cost ZigBee or high speed UltraWideband grab the main market share.