Research Notes

The increasing sales of smartphones is raising 10 questions

that most mobile operators should already be asking themselves – if they dare.

The whole world knows that smartphone sales are literally exploding. But the underlying economy of this sales increase is something that many operators ought to take a very close look at – especially considering the parallel development of the operators’ costs in acquiring customers (SAC) and revenue per customer (ARPU).

Strand Consult has been monitoring and analysing the smartphone market across a number of countries for the past two years. Our results show that many operators are seeing their SAC exploding at the same rate as their smartphone sales growth. Unfortunately these operators are not seeing any similar growth in ARPU.

Basically operators are currently focusing on smartphones because that is what the market wants. But our research shows that many operators have no strategy on how to optimise their smartphone sales to ensure a healthy balance between their SAC and the lifetime ARPU of their customers.

We have created 10 key questions that operators should ask themselves:

1. Has your smartphone sales resulted in higher sales, marketing and subsidies costs? If the answer is yes, is your growth in costs being compensated by a corresponding growth in mobile revenue that includes your usual profit?

2. What size share of the premium services that smartphone users are purchasing is being invoiced via operator billing, thereby giving you revenue and how much is being invoiced via other billing models, thereby bypassing the operators?

3. Do some smartphone brands or models result in a higher churn than others and if so, is that due to the product life cycle that the individual manufacturer is targeting?

4. Has the increase in smartphones sales negatively influenced your stock rotation risk when purchasing, marketing, distributing and selling smartphones? In other words has it become easier or more difficult to control your stock of mobile phones?

5. Has the increase in smartphones sales negatively influenced your customer service costs? Which channels are customers using to contact you, online, via call centres, or by using the physical retail channels that usually handles sales?

6. Which channels are most suitable for marketing and selling smartphones? Are the channels you are using to handle this segment more cost efficient than other channels and which channels are currently your most cost efficient? Have you found the Internet to be an efficient and inexpensive method of handling smartphones sales?

7. Have you experienced some smartphone models at times becoming so popular that you can sell them without subsidies – for example in connection with launching a new version of an already popular smartphone?

8. How have the different smartphone OSs and their respective app stores influenced your business of selling mobile services via your own portals and app stores, and via content providers that are using operator billing when marketing and selling mobile services that are competing against the OS manufacturers?

9. Do you think that some operators have been focusing so much on smartphones that they might have overlooked customers, customer segments or other products that could have been more profitable than the majority of the smartphone customers they have acquired? If some operators have neglected other more profitable business areas, how would that have affected their overall business?

10. In your opinion, who has profited the most on the smartphone market? Is it the operators, the dealers, the customers or the smartphone manufacturers? Who has made the largest investments and who is getting the biggest return on the money they have spent?

We could easily add more questions to the above list and we have no doubt that many operators already know some of the answers to our smartphone market questions. However we believe that it is very important for the mobile industry to have an open debate about the smartphone market, especially if you want to make money and be successful in this area in the future.

Strand Consult has been following the mobile industry for 16 years. We were the first in the world to voice criticism about the iPhone and how the iPhone was having a negative influence on many operators’ business cases. Our iPhone market report from 2009 – – reached a distribution of over 10,000 copies and is probably the single most read and quoted report in the history of the mobile industry.

If you would like to learn more about the smartphone market, how it is developing and how you as a market player in this business can achieve success, please do not hesitate to contact Strand Consult.

We can offer you a unique workshop concept that can help you create and optimise your smartphone business strategy.   Contact Us
More Information:

How to get success on the smartphone market

Executive workshop for Top Management and Board Members in the mobile industry

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