Device or No Device
Third party incursions to the device market
From the device perspective, market incursions are occurring from two directions: apps and behemoths. These negatively impact the desirability of the device market for CSPs.
First, services are migrating from the control of the service provider to the purview of thousands of app developers. We have already written of this market movement. iOS and Android users can choose to download and run over two million apps. Some of these are successful competitors to the voice and SMS apps that come installed in a device by default; apps that route calls and messages to a CPs carrier’s network access point. For a growing segment of consumers, WhatsApp is carrying all the SMS traffic and Skype or FaceTime is connecting the voice, and now video, call. Facebook bought WhatsApp and Microsoft bought Skype. If the service is not offered by the CSP, then why should the CSP carry sales and service expenses?
For now, many users still select the default message and phone service. It remains vitally important to have this standards-based connection application on all devices sold. Perhaps this could be accomplished by creating an installable, branded-app bundle for each CSP. These exist for users to access account information services, but also could include all the network access point services and value added services as well.
Today two million apps address a wide range of user needs (and a significantly wider range of app portal maker desires). When selling the device, some carriers have taken fees or other deals to bundle some of these apps in the operating systems of phones. Consumers express their opinion of this practice in the expressive term: bloatware. With a few exceptions of pervasive portals, like Facebook, Instagram, and so on, service providers are not pleasing their consumer base with these irremovable apps. Some are so incensed they have already migrated to the unlocked phone market. Note that marketing genius Amazon, when selling its Kindle e-readers, lets a consumer pay a small bit extra to buy out of future displays of advertisements at the time of device purchase. There are real future downsides to having your customers experience a constant level of irritation where they can point to you as the cause.
A few of the two million apps are self-contained: they sit on the phone and you can use them whether or not the phone is network connected. Your calculator is one example that springs readily to mind. However, most apps need to be connect to the network either to fetch data from some service provider, or to store your information in the cloud somewhere, or both. Just about every app needs to be network connected: news, books, entertainment, games, productivity tools, banking, shopping, as well as competitive communication tools such as email, messaging, and voice and video services. But the network might not be your home carrier’s network: you, as a consumer, could be roaming on a different carrier’s network. Or, with WiFi readily available at home, and in stores, bars, restaurants, hotels, offices, buses, trains and planes, there’s a good chance that users will connect through WiFi when they use these non-carrier apps. Much of this just becomes IP traffic. But it could be routed with specific QoS or VPN connections if a carrier created an app for this traffic. Just some thoughts: perhaps being in the app market is a better future than being in the device market.
Second, the major internet portal behemoths are entering the device market. Yes there are mixed results for these companies, but most believe this an execution problem, not a misreading of the market. Apple rode the back of an offer of exclusive CSP presentation to get their product before the market and the market loved their product, not the providing CSP. That train has departed the station. Your customer’s loyalty has already switched to Apple. Google and Microsoft have been targeting the device market for a few years. They have the same advantages as Apple and it is only product pacing keeping them from the same consumer loyalty capture. They have the deep pockets to do this and have each bought major phone manufacturers. Whither they ride their partnerships with device manufactures, or design and market devices directly or both, the consumer will associate the device with them and not the CSP. And others are on the sidelines; Facebook might soon follow suit.
Diversity and Multiplicity
So the phone, especially a smartphone, is no longer exclusively there to enable CSP services. To the contrary, we have in a few years moved from the phone being only of interest to the phone company, to the phone being of interest to tens of thousands of third-party service providers [Yes, banking is a service] who make money from apps and services that would not exist without the existence of the smartphone. For sure, those apps and services would not exist without the network too, but the network only has to do one thing: carry the bits reliably, quickly, securely, and more or less in the right order. The device and the content server is where the true flavor of those millions of apps and associated services exists.
Today, consumers expect to access multiple networks and multiple apps. A high-end smartphone is technically capable of accessing just about every cellular network in the world, which means it’s able to handle at least twenty flavors of old and new cellular technology. Plus, it can connect wirelessly using WiFi, Bluetooth, and NFC. It will also have a GPS radio, and maybe an FM receiver. The ability to move easily from network to network makes things better for users. So much so that major carriers in the U.S. are following T-Mobile’s example and now offer WiFi calling to their customers, so regular phone calls and messages can start or finish over WiFi. The carriers benefit too - WiFi calling reduces traffic across the radio access network, and enables more customers to make calls in areas of poor coverage.
