Research Notes

Ten Mega Trends Will Turn The Mobile Industry Upside Down

 – And The Industry will Need To Reboot. 
The mobile industry has been characterised by a constant expansion and change ever since the very first mobile calls were placed and the players in the mobile value chain have for the same reasons become used to having to have a positive attitude towards changes and new tendencies. Market players are accustomed to not considering change as inhibitive – but rather as a possibility to create growth and achieve competitive advantages.

However the mobile industry has now reached a point where a number of very important market changes are accumulating, something that is making even experienced industry leaders admit that they are having great difficulty remembering anything reminiscent of this situation and how they therefore should proceed.

In other words the mobile industry leaders know that the industry is moving in a completely new direction – but the many changes that are difficult to define mean that the top management is having difficulty working out in precisely which direction the industry is actually moving! And if the market players are having difficulty being specific about the changes and view them as problems, it becomes much more difficult to exploit the coming changes to create a competitive advantage.

To help create an overview, Strand Consult has identified and analysed 10 Mega-trends in the mobile industry, that are so comprehensive that they will without a doubt permanently change the mobile industry.

In random order these Mega-trends are:1) The threat and possibilities of the Discount Mobile Service Providers,
2) Falling profit margins on basic mobile services (voice, SMS) as a result of competition,
3) The use of outsourcing – to minimize OPEX,
4) Controlled investment in infrastructure – to reduce CAPEX,
5) The use of micro-segmentation (Mobile operators will use sub-brands and producers of mobile terminals will introduce a wide range of different terminal models),
6) Higher marketing expenses – partly because of the use of micro-segmentation,
7) Stock Rotation Risk – the result of the terminal producers larger product portfolio,
8) New business models in the mobile value chain – the existing business models are an impediment on economic growth,
9) A more complex value chain – a growing number of different players seek the place in the mobile value chain,
10) Mobile penetration vs. SIM-penetration – there is an important difference.

Together these Mega-trends will create a Paradigm shift in the mobile industry and the industry will basically have to reboot. In the same way that a computer needs to reboot to reload its operating system after the installation of new software or hardware, the mobile industry will also need a kind of reboot when the time comes, as the mobile value chain without a doubt will undergo radical changes.

We are therefore looking at the need for a ”Ctrl-Alt-Delete” – as the installation of new business- and revenue models in the mobile value chain will demand it.

Each of the 10 mega-trends that we have identified has been individually analysed in depth in Strand Consults new report “Mega trends in the mobile industry – a question of life and death” (300+ pages), and how the tendencies will affect both handset manufacturers, content providers, mobile operators and dealers is comprehensively described. The report concludes amongst other things that there is absolutely no doubt that all the market players in the value chain, due to these 10 Mega-trends, will be forced to totally re-evaluate and adapt their business if they want to remain in business in the future. A “business as usual” approach to the future will for the same reason mean the start of the end for those mobile players that do nothing and the report therefore puts forward suggestions for which considerations and actions each market player should examine and launch to prepare for the effect of the 10 Mega-trends.

We will especially be seeing initiatives for restructuring business procedures and business models amongst the mobile operators. The operators focus on narrowing the definition of their core competencies will lead to smaller organisations, more outsourcing, more segmentation and the widespread use of revenue sharing agreements with all their partners across the whole value chain. These initiatives from the mobile operators will put heavy demands on their partners’ flexibility and ability to adapt their internal business procedures.

The 10 Mega-trends will of course not just be a threat for the mobile players – these new tendencies will also open considerable possibilities. However it is extremely important to emphasise that these new business models will not establish and materialise by themselves – and that is the challenge that this report can help prepare the market players to handle. To realise the revenue potential requires that the players take the correct initiatives to create the market themselves. Most players will have to redefine their own roles in the value chain and especially redefine the way that they co-operate with the other market players. One realistic – but sad – scenario in this connection could be that individual players, due to their lack of understanding of this new reality, will make a number of strategic mistakes with catastrophic results for their future revenue from new services.

When a PC owner needs to reboot the computer they can usually choose a “warm boot” from the restart menu. But if something has gone wrong with the PC, either with the hardware or software and the PC is locked, then there is only one option left –  terminating the power to the PC and “cold booting”. We hope it will not be necessary to pull the power plug on the mobile industry and thereby avoid a “cold boot” – but this will require that the market players respond critically to the 10 Mega-trends and complete a controlled installation of new business and revenue sharing models. 

Mega trends in the mobile industry

The 10 Mega Trends
Mega Trend 1:
Mega Trend 2:
Mega Trend 3:
Mega Trend 4:
Mega Trend 5:
Mega Trend 6:
Mega Trend 7:
Mega Trend 8:
Mega Trend 9:
Mega Trend 10:

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