Mobile operators need to find ways of boosting revenues and sustaining or growing profits by selling applications or other value-added products and services that can make up for the growing deficit between profit margins on data and those from traditional voice calls.
This is the view of Fernando Usera, MD of the communications, media and technology unit at Accenture SA. His comments follow publication of the global consulting company’s Consumer Electronics and Services Usage Report for 2012. For the first time in the report’s four year history, it includes data on SA, which was collected from a survey of 1 000 urban SA consumers.
Usera says in Europe and the US, operators already need to find solutions to the dual problems of increasing demand for data combined with declining voice revenue. Many are failing to do so. He adds the problem will begin to affect developing market operators soon.
“Very few operators have managed to compensate with data revenue alone,” Usera says, so they need to think about content and services rather than data itself as the margins are slim. He says they need to reposition themselves as “supermarkets of services”.
If operators do manage to develop and sell their own services or aggregate third-party offerings, they will have to increase volumes significantly to maintain historical margins.
He says that in the heady days of voice, operators sold devices with voice as the service and that this was a case of selling “one service to millions”. He says operators now need to sell a wider range of services to a wider range of clients, or what he calls a “thousands-to-thousands” approach.
In order to achieve this, operators need to change the way salespeople are trained. Usera says the demand for greater segmentation means the salesforce must understand a more diverse array of products and a wider range of clients.
According to the Accenture report, the bulk of app downloads by consumers are from device manufacturers’ app stores (23%), followed by device software providers such as Google and Microsoft (22%). Operators themselves only account for 8% of downloads, and this is the area on which they most need to focus.
“Once you get the client downloading from you, it’s possible to offer them other services, too,” says Usera. “You need to get the client into the operator’s ecosystem.”
One of the potential downsides of operators failing to keep profitability up is that they’ll be less inclined, or able, to investment in new technology and maintain existing equipment, according to Usera.
He warns that although the decline in voice revenue is being felt far less in developing markets than mature ones for now, it is something developing market operators will have to face down the line. However, they have the advantage of time and can learn from how mature markets respond to the challenge.
Developing markets also have the advantage of younger populations that embrace innovation more rapidly, meaning it is sometimes possible for emerging markets to leapfrog mature ones and even sidestep some of the challenges facing them if there is sufficient and rapid innovation.
On a more positive note, Usera says attitudes towards emerging markets from global consumer electronics companies are changing, with developing markets being seen as the greatest potential growth areas compared to half a decade ago when they were often ignored.
Usera says this can be seen in the fact that most models of devices available in developed markets now appear in emerging ones simultaneously or shortly thereafter.
The best advice Usera says he can offer mobile operators is to focus on transforming their businesses to offer services and value-added products, improving customer experience and creating long-term and loyal customer relationships. — Craig Wilson, TechCentral
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