Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile indU.S.try to give their insights into the marketplace.
While it was good to see some retailers reporting stronger than expected sales for Black Friday and Cyber Monday, the reality is that these two shopping “holidays” are a U.S. phenomenon.
For those of U.S. in wireless, we recognize that the U.S. market is important but the reality is that it is a fraction of the total opportunity and much of the innovation in wireless has happened outside our borders. For companies in the smartphone and/or content businesses looking to grow their top-lines during these difficult times, looking abroad is a good place for many reasons.
It’s where the volume is
Roughly 75% of smartphones are sold outside of the U.S. According to Thomas Weisel Partners, 523 million smartphones will be sold globally from 2008-2010, representing $156 billion in revenue opportunity. Americans can sometimes get myopic when thinking about their country.
The reality is that with all the hype over the iPhone, G1, BlackBerry Storm, etc., Americans are only purchasing 25% of smartphones being sold in the world. Europe and Asia/Pacific continue to be stronger markets than North America with over 30% and 35% of worldwide demand respectively. The usual suspects of China and India show great hope while the Japanese market is also beginning to embrace smartphones at a rapid pace. Historically thought of as having many “home grown” technologies (e.g., PDC, iMode, MOAP version of Symbian, etc.), this market is beginning to really take off. iPhone, RIM, Windows Mobile, Linux, etc. are all gaining footholds, and with over 100 million data savvy subscribers, Japan has become a very attractive market.
Hungry customers
Consumer demand for content is greater outside the U.S.. According to iSuppli Corp., the global content market will grow from $24 billion to $30 billion from 2008-2009 with the majority of that growth occurring outside of the U.S. market. Data revenues in Europe and Asia have historically been higher than the U.S. With the proliferation of data cards and SMS in the U.S., the U.S. has been closing the gap. Still, European and Asian customers consume more content and are expected to continue as new devices support more sophisticated and richer applications.
Localized (but not necessarily local) content
Having a mix of local and global content is key to succeeding outside the U.S. But, regardless of which content is global vs. local, all content must be localized for each market. In other words, the content must be native in its essence to give the necessary “street cred” that you understand not just how to translate the words but more importantly have the right tone and marketing message. That does not necessarily mean that the content all has to be “local,” as global content can prove quite popular, but you must understand which content will resonate and why.
Hedge your bets
While the economies of many countries are struggling right now, the reality is that the pain is not being dispersed evenly. Having an extensive global strategy spanning multiple markets to hedge your exposure is critical in these times.
Standardization is finally coming
Historically, wireless has been overly customized for each country/geography. Each region has its “home grown” version of different technologies that make global compatibility difficult. Although fragmentation of many operating systems looks to be a reality of the future, consistency is beginning to emerge among those operating systems around the world. Harmonizing around one version of LiMo, one version of Android, one version of Symbian, etc. will make expansion much easier for those looking to export their content.
But it is not easy and there are many things you need to do to support the opportunity.
Distribution
You can have the best products, best support and greatest user experience but if the customer does not know where to find the product or buy it, none of that matters. Globally, establishing credible distribution partners who can provide the reach to find the market is, in my opinion, the single biggest success factor. Trying to go as a lone wolf into foreign waters may look good on the spreadsheet from a margin perspective, but it can lead to disaster if no one knows your brand, your proposition, or differentiation.
The back-office
Local currencies, language characters, customer service, export compliance, etc. all bring complexity to supporting a global marketplace. Having the systems, processes and people who can adjust to these factors is critical. At Handango, we have transacted in over 200 countries and in 16 currencies. It has taken many years to be able to support these complexities and we get new ones each day, but the investment has been worth it.
Segments are different
In the U.S., productivity applications on smartphones are a major content driver as the enterprise looks to use smartphones to drive workplace efficiency. In many Asian countries, productivity applications are not as popular as in the U.S.; however, social networking, entertainment and gaming are very popular. Understanding who your customer is and recognizing that a 40-year-old professional in Europe most likely has different needs than a 40-year-old professional in China is critical to success. Having the programming expertise is key.
In summation, during these challenging economic times, diversifying away from one particular market is smart business. Given the growth and opportunity for smartphones and content, the global market is there and as the “big boys” get more aggressive with their global expansion plans, it opens-up tremendous opportunities on which others can capitalize.
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