Research Notes

Analysis: How do you market new 3G mobile services – a look at Hutchison 3G

– with a snazzy demo that leaves consumers in the dark.
Hutchison 3G or simply “3” as they now would like to be called, have just
announced “details” of their upcoming 3G products and services and are now
looking for 20.000 new users to sign up as “founders” and thereby kick off
3G telephony in the UK. You can see all their new services on 3’s website

So how do you go about getting new customers to fork out a substantial amount of money for new technology? 3 is going with the snazzy “it works great” Flash demo approach, combined with a lot of somewhat vague information. This is, in a funny sort of way, a welcome change from all the technical mobile mumbo jumbo that consumers have been bombarded with through the last years, but 3’s non-technical approach does makes it rather difficult for consumers to compare 3’s “offerings” to the latest GPRS colour mobile phones being marketed by 3’s competitors.

3’s “lets keep it really simple” marketing approach on their website leaves potential customers with a good impression of what services will be available, but at the same time with a lot of unanswered questions if they want to be able to make purchasing decisions. Some of the questions that might spring to mind when looking though 3’s online demo are:

· The demos of their services do not show the actual speed of the services – including navigating on the keypad, but the demo does not mention that. How fast is the actual speed of services?
· What will data traffic cost after you have used up your “substantial amount of video traffic”?
· No indication at all of what the actual 3G coverage will be – or don’t 3 mind where “Founders” live?
· How long time do video clips need to buffer? Why not show buffer time in the demo?
· Are video clips streamed or downloaded – if they are streamed, do you pay double the traffic price to watch them twice?
· Can you forward downloaded video clips of e.g. football goals to another 3 user? What would that cost?

We couldn’t agree more that the basic idea is to sell the benefits of new technology – not the technology itself. But the above list is only a handful of the many questions that right now cannot be answered by looking at 3’s website and thereby making it virtually impossible to make any kind of comparison to 3’s competitors latest advanced 2.5G colour mobile phones that also have built in camera and video options.

One of the big debates during 2002 was what the actual difference really is – if any – between 2.5G and 3G – and if there is a difference what are the benefits for the consumer and how much will those benefits cost? It does seem a pity that 3 have not done some comparison to 2.5G, showing potential buyers why they should choose 3G, rather than buying a feature packed 2.5G phone that seems to be capable of much similar services as 3 is showing. Have a look at the Vodafone Live demo.
asides from maybe video conferencing it is difficult to see much difference.

Maybe 3 is being slightly vague about the whole thing, simply due to the fact that mobile consumers in the UK have not yet had much experience with mobile services. It is only during the past year that premium SMS has really taken off in the UK, compared to countries like Norway and Denmark, that started up premium SMS 3 and 2 years ago. So mobile users in the UK – except for the early adopters and some corporate heavy users – have had little real experience with mobile services other than premium SMS.

According to Strand Consults latest report “How to make money mobile services” that looks at all types of mobile services, now and in the coming years in Europe, the market for mobile services in the UK will grow from Euro 275 million in 2002 – with 75% of that coming from premium SMS services – to over Euro 1 billion in 2003. Out of the predicted 1 billion Euro in 2003, only 5 million Euro will come from video on demand services – partly because the consumers first have to have a good reason to buy new
mobile phones that can handle these new services and more importantly – they have to learn how to use these many new services.

Looking at 3’s website, one must ask oneself who 3 think will want to be early adopters on an expensive and advanced new mobile phone? They say themselves on their website that they are targeting “heavy users”, but as many heavy users are actually business customers, 3’s demo with what appears to be drunk naked men, a girl spilling beer on a guy and kids giggling at each other using the video conferencing as they bungee jump, does seem a little misplaced. Wouldn’t it perhaps be more to the point seeing a businessman stuck in traffic in a taxi, but following the meeting he was
meant to be at using the video conferencing? Also, many heavy users are simply heavy users because they move around a lot during their working day – having some services working or not working depending on where you might be right now is tough to sell to heavy users. Even more reason to take a more sober approach to the whole 3G demo on their website and give an indication of the coverage of their 3G network.

Marketing something new is always a challenge, but using a demo on a PC to market something that will work on a non-PC platform can be taking unnecessary risks – unless done properly. For example, if you have ever tried a WAP simulator on a PC in the early WAP days, you will also have experienced that WAP – on a PC – was very fast and easy to navigate using your mouse and keyboard. Maybe you even bought a WAP mobile phone having tried a WAP simulator – only to find out that WAP on a mobile phone over circuit switched data network (GSM) didn’t work too well!

3’s basic idea of taking the technology out of the picture is fine, but early adopters and heavy users will also be interested in the technology, so why not take out some of the more slapstick demo items and instead add some items with a bit more sober content and extensive information about their services, coverage and pricing, giving consumers the chance to take them a little more seriously and maybe wait with buying a new 2.5G phone until 3 get theirs launched.

Long awaited 3G mobile telephony is at last almost here thanks to 3 and both consumers and content providers alike will be taking much more interest in 3G mobile telephony as 3 starts rolling out their networks and mobile services around Europe.
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