TELECOMS & MOBILE
Technophiles won't determine 3G's future
19-07-2004
by Craig Liddell
Tech-savvy early-adopters don't have the customer loyalty profiles on which operators can build long term 3G business models, according to new research.
Global research and consulting company, Strategy Analytics, reports that third-generation (3G) operators will ultimately extract better lifetime value from mass-market and late adopters of new mobile technologies.
"Technophiles and business pragmatists will be the first to adopt 3G services," said David Kerr, vice president of the global wireless practice at Strategy Analytics, "however operators will need to lean heavily on handset partners to keep these segments happy, and offer frequent subsidies to meet their vicious handset replacement cycles."
The report, called "Operators Trail Handset Vendors in Mindshare and Loyalty among Technophile and Business Pragmatist 3G Visionaries," provides a detailed profile of seven segments with distinct behavioral traits and motivations in the cellular market. The profile emphasises the challenge operators face in building a strong 3G business.
The two early adopter segments -- technophile and business pragmatist -- account for 24 percent of users in both the US and Western Europe, 23 percent of lifetime value to operators, but 38 percent of handset market retail value.
Meanwhile in Ireland, several telecoms firms are finally deploying 3G services after an initial delay due to a lack of handsets. Plagued by poor adoption and consumer confusion in the past, 3G networks will be rolled out by licence holders in the next 12 months.
At the end of June 2004, Vodafone launched its 3G service in Ireland, initially providing data services to business users, with plans to facilitate 3G handsets by the year's end.
The same month, Hutchison Whampoa reaffirmed its commitment to both the Irish and UK markets. The Hong Kong-based telecoms operator offers 3G services under the '3' brand.
Another provider of 3G services is O2 Ireland, who announced in April 2004 that its 3G network coverage extends to 35 percent of the population.
A fourth operator, Meteor, will spend about EUR70 million to improve its mobile network, expanding coverage to some 94 percent of the population, up from about 88 percent in April. It will also deploy EDGE, a GSM-based technology that offers 3G-like speeds.
But Strategy Analytics believes the early adopters will not help such providers build a strong business case. "It is ultimately the mass market where greater operator value exists," Phil Kendall, director of wireless network strategies at Strategy Analytics, concluded.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 