Analysis: Carriers clueless about customer motivation

All those with cell phones, please raise your hand. With the other hand, please turn over your wallet.

It may not be as blunt, but that’s the business model for the mobile and wireless industry. Plain and simple.

Trouble is, carriers such as Sprint Corp. PCS, Voicestream Wireless Corp., AT&T Wireless Inc. and Nextel Communications Inc. are trying to determine just what you will buy and at what price, and frankly, they haven’t got a clue as to what will motivate you to turn your terrestrial office into a mobile workforce.

Demo Mobile 2000, recently held in Pasadena, Calif., makes me believe there is plenty of neat technology trying to surf the wireless wave, but most of it will make a business customer yawn.

Carriers and service providers at the conference were pinning their hopes on new data services: everything from taking pictures with your cellular phone to ordering movie tickets with your PalmPilot. They’re forgetting that business pays for the bulk of data services, not consumers.

Maybe they’re just blinded by the wireless explosion. According to J.P. Morgan & Co., wireless will account for 34 per cent of all telecommunications service revenue growth over the next five years. With compound annual growth of 15 per cent for wireless over the next five years, that means total industry revenue of more than US$100 billion by 2005 – about a quarter of the whole telecommunications industry.

That’s a big bag of money to be chasing. Last year, the wireless industry celebrated by adding 16.8 million subscribers, up 21 per cent from the 13.9 million added in 1998.

This growth is coming at a price. Revenue per subscriber is flattening. The average price of a wireless minute, around 25 U.S. cents today, will fall to nine U.S. cents by 2005, according to research from the wireless industry and J.P. Morgan.

The only customers forecast to pay more are those who have data and voice service. Now, about one per cent of all subscribers take some kind of data service. That will grow to 20 per cent by 2005, paying an average US$25 per month -or about US$10 billion per year.

And many of those will be businesses using wireless connections to get information, fill orders and check results.

Despite a global audience of almost 200 million subscribers by 2005, business users may reject lots of this new technology because it doesn’t do anything for their bottom line.

While the new wireless digital camera from LightSurf Technologies Inc. grabs the cool award, it doesn’t seem to be a pressing need for IT users.

By contrast, Wayport Inc. offered conference attendees high-speed mobile Internet access that actually worked.

The mobile workforce needs reliable connections, not frilly service. Indeed, Frank Spindler, vice-president of marketing at Intel, said 80 per cent of the company’s workforce will use or are using laptops as their sole computing resource.

Undoubtedly, there will be wireless services that mobile professionals crave. Santa Clara, Calif.-based Bevocal Inc. offers quick and convenient access to personalized Internet content and services via any telephone.

In a nifty onstage demonstration that included the destruction of a Pacific Bell Yellow Pages directory, C. Mikael Berner, a founder and CEO, used a cell phone to search for a hotel he didn’t know existed in Gun Barrel, Tex., by asking a series of questions that were answered automatically. He obtained directions and location information and only spoke to a human when actually making the hotel reservation.

If this is the year the mobile and wireless convergence takes off, firms hoping to profit from the boom in data services had better start thinking about the business customer. Otherwise, they’ll be disconnected.

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Jim Love, Chief Content Officer, IT World Canada

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