Subject: [NEXTEL-1] Commentary: Finding the right mobile applications

From: Marcel <[email-masked]>
Date: Thu, 06 Feb 2003 16:12:44 -0500

Commentary: Finding the right mobile applications
By Forrester Research
Special to CNET News.com
February 6, 2003, 4:00 AM PT
http://news.com.com/2009-1122-983496.html

By Charles S. Golvin, Senior Analyst

Mobile operators today pin their revenue hopes on new consumer data
applications.

Facing a mature market with declining prices, mobile operators look to their shiny new
packet-data networks to retain fickle customers, appeal to new market segments and prop
up sagging average revenue per customer. How? With communication, entertainment,
information and productivity applications delivered to subscribers' new data-capable
handsets.

But choosing the right set of applications is only one of the challenges that operators
face
as they try to grow their customers' reliance on the mobile network. Carriers must also
figure out a pricing model that consumers understand, a compelling marketing message
and a retention strategy to keep their best customers.

The greatest challenge that carriers face is in
the way most consumers view their
phones--as something they hold to their ear
and talk into, not a device they look at and
interact with. Operators will rely on voice
features such as three-way calling and
conditional call forwarding to seamlessly
blend voice and data--which will begin to transition phone usage from the ear to the eye.
Operators will drive the adoption of these disguised data services by offering
applications
that surreptitiously integrate data through SMS (Short Message Service) and voice
interfaces. When American Airlines sends a customer the flight information the person
requested as a text message, the customer's phone can begin to be used for data as well
as voice.

Operators will also connect with a small group of high-income early adopters thanks to
productivity applications like Sprint's, and Cingular Wireless' Seven Networks-powered
tools that extend Microsoft Outlook and Lotus Notes from the PC to a mobile device.
Entertainment junkies will pay for good games to personalize their phones and for
information on the hottest dining and music venues. These customers will sample
applications such as picture sharing on a per-message basis and then migrate to a
monthly entertainment bundle once the applications prove their value.

By 2005, data-sneaky services will have begun to change consumer behavior, and people
will understand that the handset does more than just complete calls. The natural upgrade
cycle will have raised the number of subscribers with GPRS (General Packet Radio
Service) and 1X data capability to 66 percent of mobile users in 2006, with SMS capability

becoming even more widespread, at 98 percent of wireless customers. Of these data
phone owners, 29 percent will use some form of data services other than SMS, although in
many cases the data component will be fully integrated, as it is with Virgin Mobile's
"Xtras"
such as Music Messenger.

The new landscape of mobile users--facile with data applications and more savvy about the
voice network--will require a more skilled marketing approach than for simply selling
voice
minutes. Consumers will not be able to distinguish between carriers' offers as today's
confusing pricing options are exacerbated by an expanded range of applications. Operators
must learn to craft their marketing message and application mix to specific market
segments based on motivation, lifestyle and how the customers view themselves.
Operators will also rely on mobile virtual network operator partners to hone the message
for
desirable cliques, as Nextel Communications recently did with its youth-oriented Boost
Mobile launch.

Altogether, these mobile applications will draw $6.2 billion in revenue from consumers in
2006--representing 7 percent of total average revenue per customer. While data services
will provide operators with $1.8 billion in 2006, voice services--which represent more
than
twice the data revenue in 2006--and SMS revenues will dominate pure data applications
throughout 2007. Operators will find that entertainment-motivated consumers are the most
valuable, as they are the only users who will spend more for data services than voice
applications.

When operators try to deliver mobile broadband with the next series of network upgrades in

2006--UMTS (Universal Mobile Telecommunications System) and CDMA2000 1X
EV-DV--they will benefit from having already done the hard work of transitioning consumer
behavior from voice to data. Instead of another period of turmoil, operators' experienced
marketing staffs and deepened relationships with device manufacturers will enable them to
more quickly capitalize on these new networks.

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