Research Notes

3GSM World Congress 2007 – a Preview by Strand Consult

Dear Colleague

Next week the GSM World Congress will start, and once again more than 50.000 people will meet to exchange knowledge, ideas and visions about the mobile future. One could call it the world’s largest trade related “networking party” with the sole purpose of stimulating the mobile development that has over the past years changed billions of people’s daily lives.

Again this year Strand Consult will participate, this time with four of our employees. Our aim is to collect knowledge, meet people and talk to our many customers that – like us – are spending four days in Barcelona.

At last Years congress a lot of focus was on UMA and VoIP, and the biggest Hype this year will probably be mobile-TV, IMS, mobile VoIP, as well as user generated content. This year, a lot of focus will be on new technologies, but people tend to forget to see this technology in relation to distribution, business models ,alternative solutions already on the market as well as how the average consumer will welcome this new technology. If the technology players started to understand the operators a little better, we at Strand Consult would be out of a job. On the other hand it is getting easier for us to navigate in this market which is becoming more and more complex. In the world of blind people, the one-eyed man has an easy job.

Again this year technology suppliers like Nokia/Siemens, Ericsson, Alcatel/Lucent, Nortel, Qualcomm, etc. will be telling us about their many unique offerings. We will be hearing their golden-song about how if you purchase their technology the operators CAPEX will fall and ARPU increase. Fact, the infrastructure industry is changing, and it’s a paradigm shift. The mobile industry is developing in the same way as the Pharmaceutical industry, which in one side is consolidating into a few large players, and it is not these big old players who are delivereing the innovation anymore. Innovation is something you purchase from smaller companies. We believe that the exiting news this year will come from the smaller and medium sized players, who only have their unique products to profile themselves on, against the big boy’s PR machines.

On the operator side, it will be interesting to hear the CxO’s talk about their view on the future. During the year, we spend quite some time with CEO’s etc from many of the big operators around the world. Generally they are a nice bunch of people, with a realistic view on the future, when you are speaking with them in confidence. However at a conference such as 3GSM it is almost like their spin doctors, PR and Investor Relations people transforms these normally intelligent and nice people.

If we were to look at 3GSM 2007 with the operators eyes, we would call it confession year! Meaning its time for the operators to get on the podium and say the things they said in the past didn’t come though, and then they should give a realistic view of the future. We have participated in 3GSM throughout the years and could easily make a list of statements, and a list of what happened afterwards. The reality is that many operators have viewed the business much like an airline. They have tried to convince the world that the future was business class, and much like the airlines who have targeted mainly business class, the operators find themselves in difficulty.

We as always look forward hearing Arun Sarin from Vodafone, the man at the top of operator with the biggest ambitions, and the man who had to admit it quite didn’t develop as they expected. Fact is, that Vodafone bailed-out of Sweden and Japan, sold their operations in Belgium and Switzerland, and are facing a hard time in Germany and the Netherlands. The question is, if it isn’t time for Vodafone to confess their sins and admit their strategy and focus on Vodafone Live isn’t a success.

Many other operators will be sending representatives, and lets focus on a positive one. One that we in Strand Consult have known through many years, an operator from a country with 4,6 million inhabitants in the cold Northern part of Europe. We are of course talking about Telenor, who have created an impressing business through organic growth, and through establishing themselves in interesting markets at the right time. When we years back said this was an operator to watch, as they would be very successful, most people didn’t believe us. However this is the only operator we know of which have send out a quarterly statement in 2006 with the headline reading “Oh Happy Days”. A lot of shareholders would like to see such a press release from other operators.

It will be very interesting to hear from the many operators from the ”third world”. The fact is, that many in the western world often look crooked at these people who live far from us and have different cultures. Looking at these operators, there are quite a lot of operators who sell a mobile minute for a few cents and makes a lot of money doing so. Some are smaller players, others are growing big in markets with a lot of people. Few years back, not many people talked about MTC, but after they acquired Celtel, they have gotten an impressing platform to work from. Maybe the real heroes in this industry aren’t Vodafone, Telefonica, Orange and T-mobile.

From the operators we will hear about outsourcing. By now surely everyone knows how Vodafone and Orange will share network in the UK. We will hear from one operator after another, how they will outsource the running of their networks, which a few years ago was a core-business. Players such as Ericsson, Nokia/Siemens, Alcatel/Lucent and Motorola are more than ready to take over the running of the networks. To outsource the running of the network is already a reality in Italy, the UK, Austria, Germany, The Netherlands, Belgium, India, Turkey, Brazil, The US and many more countries.

We are certain that if you want to describe this year’s GSM World Congress, the strategic focus are likely follow the tendencies we have described in our report “Mega trends in the mobile industry”. We believe we will be seeing a number of the industry’s top management focus their presentations on admitting that the industry is facing a paradigm shift.

The GSM World Congress 2007 will also be remembered by many as the conference were the attention moved farther away from the large operators like Vodafone, Orange, T-Mobil and Telefonica, over to the many smaller players that are starting to influence the mobile value chain. People will be talking even more about the MVNOs, Internet companies, media companies, content aggregators and innovative technology providers. There is no doubt that the industry is facing large changes, but who will be the future heroes: “the big old boys” or “the small new kids on the block”?

From our point of view, the mobile industry is – and will continue to be – one of the most exciting industries in the world, and the best people in this industry will have very many exciting possibilities and opportunities. On the other hand we have no doubt that those that do not understand how to adapt to the new mobile reality will have a very difficult future ahead of them.

We are looking forward to some very exciting days in Barcelona – the 3GSM World Congress will again surprise many people this year and even though we will go home with many answers, we will more than likely have a number of new questions that will need answering next year….

If you wish to meet with Strand Consult during the 3GSM, please email us your contact details and the details/purpose of the meeting, and we will get back to you. Journalists are most welcome! Meet Strand Consult at 3GSM

See you in Barcelona

Strand Consult 2007 Predictions

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