Research Notes

Preconfigured mobile phones can boost 2.5G rollout

– and use of new mobile services
Letting customers walk out of a shop with a preconfigured 2.5G mobile phone in their hands where GPRS and WAP is already working, an e-mail application is ready to go and some other mobile services like multiplayer games or instant messaging
are configured and working, can really make a difference to the speed of the rollout of 2.5G.

This is what they have done in Korea and in the first year, over 9 million customers (25% of the 36 million mobile subscribers) have bought a new preconfigured 2.5G mobile phone and out of them 85% are frequently using mobile services!

Many customers who today have a GPRS mobile phone in Europe, have not actually started using GPRS, simply because they have got it configured it yet, or tried and given up. As mobile phones get more and more complicated, being able to actually use the phone with a few touches of a button – and no long complicated set-up procedures – will become more and more crucial for the success of both the 2.5G mobile phones and the take up of new mobile services.

When a customer walks out of a store in Korea with a new 2.5G mobile phone in their hands, the phone has been preloaded with a number of applications that the operator hopes the mobile user will start using. In Korea the mobile operators are using sub-brands to market and sell mobile phones to different customer segments – so the phone a teenager buys will have different pre-installed applications than a phone a woman buys!

A typical set of preloaded applications in a teenagers phone could be:
-An e-mail application with an entertaining interface
-A Chat application
-A number of games

A typical set of preloaded applications in a adults phone could be:
-An e-mail application
-A calendar (PIMS) application
-An Instant Messaging application

The different applications are either already paid for, through the subscription or have a free evaluation period of typically a month. Or it can be a combination of both – e.g. where the e-mail is included in the subscription and the other applications can be freely tried for a period of time.

For the content providers and service creators, actually getting your application pre-installed in the mobile phone is ultimate goal and does give competition between the service creators and content owners to develop innovative, entertaining and easy to use services that the mobile users can quickly start using. There were two main business models to get applications developed for the 2.5G mobile phones. The first was where operators subsidised the development of new application and gave a smaller revenue share by keeping usage prices low or free and the second was that the service owner put his application on the phone for free, but then got a larger slice of the revenue from the service.

As there is only room for a limited number of applications on each mobile phone, the mobile operator will usually preinstall 4 or 5 applications, leaving room on the mobile phone for the user to download another 4 or 5 applications – depending on their size.

There are many other applications for the mobile user to choose from and they can be accessed either from a mobile portal or from the brand or sub-brand portal that the customer subscribes to.

Of course, the applications that are preloaded in the mobile phone get the most usage, but after customers have gotten used to the applications, they start looking for other applications that also can inform them, help them or entertain them on their mobile phones. It is common that later on in the life span of the phone, the original pre-loaded applications get replaced by the subscriber to ones that suit his or her needs even better.

Strand Consult spent almost 9 months analysing the worlds most advanced mobile market. We met with all the players in the mobile value chain and been honoured to have access to information not previously disclosed.
We describe what the operators, the content owners and the technology companies business case actually looks like for real. With key figures and information we give a detailed description of a mobile market with over 30 million mobile customers –
of which 9 million are 2.5G users
and 85% are regular users of 2.5G mobile services.
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