Launching new technology into a market involves more than just technological know-how. The expectations of all parties must be managed in order to control the risks, analysts say.
System operators must be responsible for the expectations they create in the minds of customers. Equipment manufacturers must manage expectations about delivery. Expectations shared with the distributor must be handled as well.
“We’ve consistently seen expectations being set that we cannot deliver at this time and point,” said Richard Siber, wireless analyst with Andersen Consulting. “And there are a whole group of variables creating these expectations. It’s not coming from one channel or avenue.”
U.S. consumers have gone from rotary phones to touch-tone to cordless in recent years. In the American marketplace, new and improved products are constantly being introduced at attractive prices. Consequently, consumers now expect this progress, Siber said.
“Without high expectations, we wouldn’t see innovation. But we have to be careful. If I have a product that I say is as good as wireline service and it can be used anywhere, chances are the customer will buy it. Then they find out they can’t use it anywhere. So they churn to the competing carrier and find out it’s the same situation. Some PCS carriers are exploiting this to their advantage,” Siber said.
Numerous wireless technologies not previously deployed commercially in the United States now are being launched:
Code Division Multiple Access at 800 MHz.
Global System for Mobile communications at 1900 MHz.
Two-way radio systems at 220 MHz.
Integrated dispatch enhanced network (iDEN) technology created by Motorola Inc. and used by Nextel Communications Inc. at 800 MHz.
Frequency Hopping Multiple Access spread-spectrum networks being built by Geotek Communications Inc.
All five technologies are being introduced with discount pricing or equipment discounts or other incentives. In some cases, such as with Geotek, contracts include an understanding that the system is new. It’s a way of setting expectations, Geotek said.
Most operators with new technology are using a measured approach to rolling out service. But last September’s launch of two-way paging by SkyTel Corp. in 1,300 cities was accompanied by abundant advertising. By March, public crowing by the company had cooled. Glitches appeared in the system, due primarily to an insufficient number of receivers and a software malfunction. A succession of critical articles in newspapers and magazines followed. SkyTel’s promotions had boasted their 2-Way pagers could do what other pagers couldn’t; critics mocked that even SkyTel couldn’t do it.
The company has backed away from strong marketing until problems are fixed, which SkyTel said it hopes to accomplish in the next few months.
To avoid public humiliation, companies can roll out new technology using a “stealth” approach, said John Bensche, equity researcher of wireless for CS First Boston Corp.
That’s how AirTouch Communications Inc. handled it last month when it loaded selected high-use customers onto its new CDMA system, to monitor progress privately, so to speak, through those full-pay customers.
“The guy who goes first takes the tomatoes. First-generation equipment may have bumps in it, and then the naysayers have their day, but the problems get fixed. Look at the Pentium chip*…” Bensche said.
Intel Corp. experienced negative publicity in 1994 when its new Pentium computer chip allowed personal computers to make mathematical errors. Intel says it began fixing the design flaw before publicity even surfaced and shipped out correct chips about six months after discovering the problem.
“We acknowledged we had a problem and offered consumers a no-question replacement,” said Intel spokeswoman Stacey O’Hara. “We learned about our consumers by talking to them, and they learned that not every microprocessor is perfect.”
First-generation handset issues already have caused implementation roadblocks for some wireless operators.
After more than 90,000 iDEN handsets had been distributed, Motorola began reconfiguring the split of the channel path from 6-to-1 to 3-to-1 to improve voice quality. Nextel has slowed its marketing until beta testing is finished for the 3-to-1 product.
CDMA supporter Qualcomm Inc. first trumpeted an 8 kilobit-per-second vocoder for CDMA networks, then expressed support for a 13 kps vocoder. While some operators have launched with 8-kilobit equipment, others are waiting for 13-kps equipment. Variable equipment is working its way into the equation.
Some 220 MHz operators launched their networks to find that subscribers strongly preferred a portable device over the vehicle-mounted product. Marketing was delayed in some cases while the portable device was manufactured and delivered.
Technology aside, it is tough introducing an unfamiliar name into established markets, such as the two-way radio business, said David Elkin, president of U S MobilComm, a 220 MHz operator.
“It’s a hurdle selling anything that doesn’t say Motorola on it. And there’s a resistance to change. When we first got into this business, the dealers didn’t even want to talk to us,” Elkin said.
U S MobilComm uses equipment manufactured by SEA Inc. U S MobilComm loaned 220 MHz units to dealers, explained the coverage area and waited to hear back, Elkin said.
“Dealers now treat this as an acceptable solution. It takes time, but if a product is reliable, you get the right people talking,” Elkin said. But just selling dealers on the product doesn’t accomplish anything, he continued. “You have to give technical training and make sure everyone is knowledgeable about product sensitivity and all the different technical aspects. You have get everyone prepared.”
