Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.
Wireless Operators Stifling Overseas Data Trafiic
Maybe the phone manufacturers will accomplish what the wireless operators are incapable of achieving for themselves: massive increases in wireless data traffic.
Ever since the 3G auction in 2001, the wireless operators have struggled to recoup the ten of billions of dollars they spent on licences.
They have tried to do this with in-house developed mobile services (like location-based services) which have not proved popular.
Then along came Apple with the iPhone, and an Apps Store, and showed the world how you develop wireless services people want: i.e. you ask the world to develop them for you in return for two thirds of the revenue they generate.
Two billion iPhone Apps downloads later, and the operators are probably realising their stupidity in handing over their in-house services development projects to a manager and expecting him to concoct services people want.
The other thing the wireless operators did to try and make money from data was to charge a fortune for accessing data, particularly if you’re mad enough or unlucky enough to access data while abroad.
Yesterday there was a brilliant account of this iniquitous rip-off in Rupert Goodwins’ Rupert’s Diary. It vividly makes the point that by charging excessively for data, the operators stifle data usage.
When do you most want to use a mobile terminal to access data? When you’re abroad. At home or in the office you used a fixed line.
Now, it seems, the wireless operators are belatedly realising that they’ve missed a trick on data and are struggling to get into bed with the phone which has done most to popularise data use – the iPhone.
Yesterday it was announced that Orange will start selling iPhones in the UK by Christmas.
(That will not help the problem of data usage abroad – just don’t take an iPhone abroad whatever you do, because some of the Apps suck down data automatically without you actually doing a thing, and you end up with a ginormous bill).
But having two UK networks working with the iPhone will help get data usage flowing.
The other phone which has been the big promoter of data usage is, of course, the Blackberry.
According to Deutsche Bank, while Blackberry and the iPhone had only 3 per handset market share last year, 35% of the operating profits of the network operators were generated on those two phones.
So the penny is dropping. The operators have to realise that you can’t control everything. You have to go outside to get your services developed. You have to share the revenue from those services.
It took the phone makers to make the operators realise that.
With a bit of luck, the operators might even start to realise that the best way to get a product to take off, is to price it to what people are prepared to pay.
The invoice guys in the accounts departments of the wireless operators may get a good laugh from the thousand pound plus bills which hapless travellers incur for foreign data usage, but ultimately the laugh’s on the operators as they fail to tap the potential revenue opportunity out there for data traffic.
TOMORROW MORNING: TOP TEN MEMS AUTOMOTIVE SUPPLIERSTags: 3g auction, data traffic, fortune, rupert goodwins, two thirds