Back in 2005 everything seemed to be about ARPU; Average Revenue Per User. The long game for mobile network operators was about a race to the bottom in voice/sms revenue, and the only way out was data services. Which is why back then the annual mobile industry back slapathon was called “3GSM”, because 3G was about to make everyone rich!
Except it didn’t.
For years, the only use case for 3G was checking the football scores on a Saturday afternoon, even that activity was often unsatisfying due to the need to access the “Vodafone Internet” and pay “Incomprehensible Per MB Rates”. Remember the dread of checking your phone in 2007, to find you’d bum dialled the internet at some point, and had been walking around town all day downloading the entire web?
The other problem was the hardware. We didn’t know it at the time, but the phones were rubbish. If things hadn’t changed, we’d all be carrying 24 MP camera phones covered in fiddly little buttons. It’s no wonder that data services weren’t taking off given the user experience served up by the operators and OEMs.
In 2005 the typical sales pitch of a typical vendor in the telecoms space always included the ARPU acronym; “we can help you to increase your ARPU”. I’ve not heard that acronym in a while, and I don’t remember seeing one vendor still selling ARPU at MWC this year. This is an important shift because it shows that the game has changed; people are no longer selling greed (make MORE money out of your customers!). But what are they selling?
The biggest buzzword by a country mile was “ecosystem”. Everyone was talking about ecosystems; how to build them, how to play a specific role in one, where to be in one, where not to be in one and so on. Evolution is a theme that feeds into this idea; ecosystems in nature evolve and mature over time. It seems at the moment the common perception is that there are slots within an emerging ecosystem that are up for grabs – the higher up the food chain you can get, the safer you’ll be as the ecosystem evolves.
So the role of the operator in this new ecosystem has yet to be defined. My favourite overheard remark of the whole show was “tiered pricing is still just being a pipe”. As a strategy, the tiered model has bought operators some leverage with the content owners, but it does not prevent them from being disintermediated from the end user. This is where the new selling angle to operators is in 2011, vendors are no longer selling greed (ARPU), they are selling fear: “buy our products or be disintermediated by the disruptive power of the internet”.
[Side note: Thankfully, acronyms are becoming increasingly remote in this industry, this is because if you differentiate yourself by selling a technology, you will be undercut as that technology inevitably gets cheaper over time, forcing you to add features and cut prices. This is the downward spiral of declining ASP that manufacturers of VHS players are very familiar with]
Apparently there were other exhibitors at the Mobile World Congress this year. I don't remember seeing any though
The way to sell to operators today is to talk about the role they want to have in the ecosystem, and how your solutions can help them to secure that role. A great way of contextualising this conversation is to point to other industries where the major players have not adapted, and the disruption has disintermediated them from the end users, marginalising their role in the ecosystem. The Record Industry is a great analogy here. Those idiots sat on their hands for YEARS, following idiotically short-sighted policies, refusing to acknowledge that they needed to adapt. The result has been amusing for those of us with a keen sense of Schadenfreude and an unsuccessful music career in their past, and the prospect of the same fate befalling network operators is not only very real, it is a key driver of today’s mobile industry.
So, what conclusions? Google’s total domination of the Mobile World congress was shocking. Anssi Vanjoki’s analogy about OEMs turning to Android being akin to Finnish boys peeing their pants for warmth seems apt. Google has very successfully gotten everyone hooked on the Android crack. No one is talking about what Google needs to do to remain relevant in this space, it seems to be wordlessly acknowledged that whatever anyone else does, Google is king.
Tl;dr: Operators have to up their game.
Tags: Android, Anssi Van Joki, ARPU, Google, linkedin, Mobile World Congress, Nokia, Stephen Elop, Windows Phone
