Editor’s Note: RCR Wireless News teamed with the Yankee Group to conduct a series of market surveys of RCR Wireless News subscribers to gauge their thoughts on various technology issues. RCR Wireless News will publish the exclusive results from our joint project, with Yankee Group’s expert analysis. More than 2,600 readers responded to the second wave of surveys. Congrats to Chris Kelly, director of sales at Nokia Corp., who won an American Express gift certificate.
The most recent iteration of the joint RCR Wireless News/Yankee Group Devices Survey set out to understand what readers expect from the U.S. handset market in 2010. The survey garnered 453 responses ranging from the viability of certain software and hardware mobile handset features from GPS, to touch screens, to the willingness of consumers to pay for unlimited data plans. The results are well worth discussing and we thank you for your participation. Let’s have a look and give these results some context.
The touch screen chronicles
Today, it’s clear that we’re in the midst of an iPhone craze. But in the last quarter, LG Electronics Co. Ltd. sold 7 million touchscreen handsets globally-most notably the Viewty, Voyager and Secret models. Even Sprint Nextel Corp. is looking to capitalize on the touch screen fad with an aggressive Samsung Electronics Co. Ltd. Instinct marketing campaign. With that in mind, can we finally say that touch screen handsets are a mass-market force? Not exactly.
The truth is that although Apple Inc. sold 1 million 3G iPhone within 3 days of release and LG reaped bountiful rewards last quarter from touch screen handset sales, the North American handset sales market is about 170 million units annually. These high-end models serve a very niche market. So if that’s the reality today, let’s take a look at what you, the readers, believe the demand for touchscreens will be come 2010.
More than one-third (37%) of you believe touchscreens won’t dominate the market in 2010, but just 3% believe they will serve only as a niche play (see chart). Therefore, if RCR Wireless News readers are correct, demand for touchscreen handsets will continue to increase during the next couple of years.
Being in the midst of an iPhone hype-cycle (27% of you believe pure touchscreens will dominate the mid- and high-range markets in 2010), the pending success of touchscreens may be inflated at this time. This is not to say that touchscreen handsets have little mass-market potential. However, enterprise users, which make up a significant percentage of the overall mid- to high-end handset market, will need to be thoroughly convinced that touchscreen keyboard technology can match the speed and precision of the QWERTY. As 23% of you indicated, the QWERTY/touchscreen hybrid may very well be more successful.
Do optimized browsers = optimized browsing?
Seventy-one percent of respondents indicated that the optimized browser was an important (24%) or very important (47%) feature as a driver for mobile value-added services adoption in the U.S. by 2010. But what does an “optimized browser” really mean? Does it mean a desktop-like Web browsing experience on the handset or just making Web content and services easily accessible and usable on the handset? This question has yet to be determined and today is being approached in many different ways at every point in the value chain. Although on-device portals/widgets were deemed much less important by RCR Wireless News ‘ readers as drivers for mobile services adoption compared with optimized browsers, today’s portals and widgets (e.g., Yahoo Go) are poor demonstrations of the potential of this strategy.
One thing is for sure: Ubiquitous access to the Web on the handset will be an essential feature by 2010 outside perhaps the very low-end of handset models. But how users access the Web and services – be it through a widget, an optimized mobile Web site or the web site built for desktop use itself – is still up for grabs and may very well include all of the above. This conundrum becomes apparent when a company like Opera, which preaches the doctrine of a “single Web” where the browser itself becomes the foundation for all content delivery and services, offers both a mobile browser (Opera Mobile) and a mobile widget to Web content and services (Opera Mini).
I would argue that the emergence of mobile value-added services has less to do with optimized browsing and more to do with optimized experiences. “Experience” includes not only the services themselves, but also the experience of getting them (think iPhone App Store). Developers and content providers will flock to the most optimized and easily accessible distribution channels because users will demand faster and simpler ways of accessing services.
Other software events considered highly valuable to the development of a thriving mobile services market are the evolution of standards and open operating systems (see chart). And while I would agree that these events will dramatically change the market landscape in terms of business models, innovation and adoption, 2010 might be too soon to recognize these events as primary drivers.
By 2010, GPS-enabled services will be the killer apps
Eighty-one percent of you indicated that GPS was important (28%) or very important (53%) to the adoption of mobile services in the United States by 2010 (see chart below). But “killer apps” are never about the underlining technology (e.g., GPS); end users don’t care. Killer apps are about: a) the application of the techno logy and b) the distribution of the technology.
The key to the success of the 3G iPhone is neither its lower price point nor its faster connection speeds; the key is its App Store. Location-based services application developers are flocking to the iPhone not because of embedded GPS (which most would assume), but because of the simple, well-organized, easily navigable App Store. Yes, GPS will be very important as you indicated. But whether it’s GPS or Wi-Fi positioning (a technology embedded on the iPhone by Skyhook Wireless), it’s the applications that matter, not the technology (e.g., GPS, A-GPS, Wi-Fi, WiMAX, etc).
Furthermore, GPS works poorly in metro areas and indoors, which begs the question: How much money can really be made in rural areas and on the open road? For a thriving and lucrative LBS ecosystem to emerge – with such services as location-enabled couponing and advertising, for example – handsets will need to go beyond GPS. The handsets that earn the largest revenue with GPS (or location-based) value-added services will combine any and all location technologies to ensure functionality in metro areas and indoors. Rural areas and highways are not the most lucrative markets for most services beyond fuel and restaurant locators.
Data will become a mass-market necessity in 2010
The viability of any product or service is never based on whether or not end users would like to have that product or service. Viability is based on end users’ willingness to pay for that product or service. In this iteration of the Devices Survey we asked RCR Wireless News readers to rank the likelihood of a variety of payment options for unlimited data plans in 2010 (see chart). The majority of you believe that end users will be willing to pay for unlimited data. Forty-five percent of you find it to be likely or very likely for end users to pay (and be willing to pay) more than $15 for unlimited data in 2010. Very few of you believe – and we agree – that open network and ad-supported models are likely to be the right bet.
Data access on mobile devices will soon become commoditized (though speeds will vary) and unlimited data plans will be the standard; though perhaps not as soon as 2010. But either way, paying for an unlimited data plan is better than getting ho
sed on your bill the same way you did when you failed to recognize your teenager’s text messaging addiction before it was too late.
Yankee Group clients can look for additional reports and analysis based on this survey series. I hope the results and analysis were valuable and I look forward to our next rendezvous.