Research Notes

Mobile World Congress 2008 – a Preview by Strand Consult

Next week, the Mobile World Congress adjourns in Barcelona. Once again, this year more than 55,000 people from across the wireless industry will converge in Spain to discuss, explore and debate what the future will bring.
As previously, five Strand Consult analysts will attend, and we look forward to spending four exciting days with our colleagues, sharing knowledge and keeping a close watch on the latest projects starting up within our young industry.
Simply put, if you don’t believe the future is wireless, there’s no reason to go to Barcelona next week. But if you believe the future is wireless, it’s probably a good idea to expand your horizons with a visit to the Mobile World Congress.
Not only is the Congress the place where the entire industry meets. It’s the Mecca for PR agencies working hard to hype their clients’ products and solutions to a level far beyond reality.
Barcelona also the favourite haunt of people preaching what they believe the industry wants to hear – rather than addressing the business issues facing companies in the real world.
So what will the MWC offer in 2008? 
We believe you’ll see five key focus points – mobile broadband, mobile broadband, mobile broadband, Internet on the mobile and value added services.
The strong focus on mobile broadband is something we don’t wish to challenge. Already today, thanks to the technology, a long list of operators in Sweden, Austria, Denmark, Poland, Finland, Spain and the UK are reporting growth rates that you’d need to delve into the history books to find.
The real question is how fast mobile broadband will grow, and what will be the right business case. Flat rate, YES, but at what price?
At the MWC, we are sure to meet operators, politicians and experts, all of whom will in due course talk about how important mobile broadband is to society. In countries like Austria, 3G and HSDPA have already made it possible to deliver broadband to areas where fixed-line copper is of low quality. In Australia, mobile broadband is supplied over great distances with HSDPA utilizing 850 MHz.
Wireless technologies are set to become the nerve centre of our future society.
We believe that 2008 will be the year when a number of players, such as NokiaSiemens, Alcatel-Lucent and Ericsson, will tell us how broadband will grow in the future – and how with technologies such as LTE, broadband will grow faster than customers are demanding.
At Strand Consult we seriously believe in mobile broadband. And at the MWC, we believe a lot of information will start to appear indicating that the mobile broadband market will be larger than the fixed broadband market.
One big question we hope will be answered is how operators will ensure that their backbone is able to keep up with the capacity that the new base stations will require to service all these new broadband customers.
We also look forward to hearing whether mobile broadband should be included in the package when a person purchases a fixed broadband connection – and if not, how it will influence players that cannot provide fixed or mobile broadband.
The MWC will confirm that mobile broadband is the future. However, there needs to be a much clearer understanding of the business models capable of driving a return on investment for operators.
The alternative is falling prices, which will lead to a consolidation wave in Europe, where 70 operators service 300 million customers. In the US, just five operators serve the same number!
Meanwhile, we will see three kinds of players in the VAS market: the classical players, which develop, market and sell technology; the Internet players, with limited knowledge of the mobile world and which seem to believe that it’s all about delivering Internet on the mobile. And then you have the ones offering the operators platforms so that they can copy Internet successes such as Facebook, Youtube, MySpace and Google into the mobile space.
In our opinion, these players should spend a little time at the MWC getting to know the industry better. Maybe then they would realise that the Internet on the mobile is not about squeezing the content of a 17-inch screen onto a 2-inch one.
In other words, innovation in the mobile world is not about delivering white label platforms to operators so they can do their own versions of FaceBook and MySpace. Just because you buy a football, 11 pairs of shoes, shirts and shorts doesn’t mean you’ve created a new football club to rival FC Barcelona or Manchester United!
We’d recommend they study the solutions offered by terminal manufacturers like Nokia, Ericsson, Samsung, Motorola and Microsoft. In the future, all of them will bundle their terminal solutions.
They should look at the business models that are the foundation for the partnerships technology and Internet providers will have to engage in with operators across multiple countries. The future VAS market will be based on a model that Telenor gave birth to, and which was copied by most operators.
Exclusive agreements between operators and internet/service providers don’t stand a chance in a world where customers want the freedom to choose their operators, terminals and service providers.
At this year’s conference, we will see a growing number of players admitting that the walled garden strategy is not the way forward in the globalised mobile world, and that success is created through partnerships – whereby unique technology is distributed widely via media companies, operators and terminal manufacturers.
 Hype, hype and hype….
Once again, Strand Consult would like to take this opportunity to ask the PR agencies to act a little more seriously. We are tired of press releases so similar they look like a ‘copy and past’ job was done, simply replacing one product and company name with another.
Maybe it’s more fun to write press releases that hype things! But they should remember that analysts like ourselves, and serious journalists, have good memories – and hype can easily backfire in an industry like ours.  
To ensure success in the mobile industry, there are three prerequisites:
1.      Broad distribution
2.      A flexible business model 
3.      A good end-user experience
Even the most aggressive PR agency can’t change the fact that the people buying and using mobile services are, in the end, ordinary people who vote with their wallets.
If they don’t feel a service adds value to their lives, they will not purchase and use it.
We hope that this year will be a year where there are more facts than hype, and where more suppliers explain how their business models will work – and share how consumers have greeted their solutions in different markets.
Speaking of hype, we believe it would be great if Steve Jobs sent a couple of his best executives to Barcelona – and we’re not talking about the PR guys! They could learn quite a lot about how this industry works, and maybe they’d be able to give a good explanation to the Board as to why sales of the iPhone in Europe were so BAD.
Google, meanwhile, could learn that the prerequisite for a successful OS is to get onto the terminals, and that success is proportionate to the number of terminals your OS is on. Were would Symbian be without Nokia? Who is going to give Google volume in this market?
The bottom line…
The Mobile World Congress will, like every year, be an interesting conference. It will have a variety of serious speakers and a high number of participants. Week seven is also one in which the greatest amount of news in this industry is announced.
All these are good reasons to come to Barcelona. Strand Consult has followed this industry for 14 years with the sole purpose of helping our customers navigate in an ever-changing industry.
We believe that the MWC in Barcelona is a good place to assess whether the trends we highlight to our clients are in fact accurate. Why not read our predictions for 2008 by clicking here?:
We are looking forward to some very exciting days in Barcelona – the Mobile 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 MWC, 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

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