January 7, 2009
[Posted by Thomas Husson]
Since this is my first post here, let me begin with an introduction: I’ve worked at JupiterResearch – now a division of Forrester – for four years in the Paris office – after having spent 6 years in the marketing division of a mobile operator. During that time my research has focused primarily on mobile consumer services: mobile Internet, mobile content, mobile media and marketing, mobile messaging. I joined Forrester via their acquisition of Jupiter in July 08, and I’m excited to join the Forrester Consumer Product and Strategy team.
Since this is prediction time, I’d like to highlight some of the key trends likely to happen in the mobile space in 2009:
1) Tough economic conditions will dominate the European consumer mobile landscape in 2009
– Longer handset renewal cycles. Several handset manufacturers expect a decrease in sales (-5/6% in volume globally according to CEOs of Nokia* and Sony Ericsson). In a recent Forrester consumer survey, 63% of US consumers said they would be less likely to buy a smartphone in today’s economy.
– Majority of consumers will focus on voice and SMS. Mobile entertainement (TV, games, music) considered as non-essential will be more difficult to promote by consumer product strategists. Few consumers were anyway ready to pay for those services. This will foster the transition towards ad-funded business models and towards the integration in voice/data packages.
– Minority of consumers will continue to be interested in new mobile services. The net result will be a greater polarization of the market between early adopters / innovators and the mass-market. Mobile services will continue to grow and to generate revenues but may take longer than expected to reach critical mass beyond geeks, business users and the younger generation.
– Starting from a low base, mobile advertising will continue to grow but will not generate significant $. There are several barriers to be removed for mobile advertising to really take off: regular and sticky audience of mobile services, education of advertisers and agencies, independent and certified measurement tools…and lack of budgets. In a recession, ad budgets will be tight and it will be tougher to allocate significant budgets for mobile in the overall media mix.
– Operators will have to reduce costs and could postpone network investments. That happened in the previous crisis (early 2000s) and may delay the launch of LTE and of Fiber (in the fixed space).
2) Regulation issues will be all the more important that new entrants will gain ground. Disruptive forces and innovation will open new opportunites particularly around web/mobile convergence
– the growing importance of regulation for operators is linked to the launch of new technologies and to the arrival of new entrants in the mobile space:
The mobile sector is increasingly dependent on political and regulation issues: pressure from the EU on roaming tariffs, decrease in termination rates, FTTH regulatory environement, pressure on environmental issues, new taxes on smartphones, convergence with media players…
This is not new and was highlighted in 2008 by 3 major facts: Apple’s disruptive potential in the smartphone market, Android’s launch from the largest online ad player coupled with the FCC auctions. In numerous countries, there are lots of open questions as how to best allocate spectrum and the digital dividend, to grant 3G licenses or to simply provide a legal framework for media companies and telecom players to work together.
– the good news is that innovation will create the building blocks for a mobile 2.0 ecosytem:
Online/web developers are only really starting to be interested in the mobile space and this will change the pace of innovation and the quality of execution.
A flow of innovation is taking place with integration of location into services, with widgets, mash-ups and mobile applications, greater avaibility of full-web browsers, more relevant mobile search, expansion of online social networking into the mobile space, mobile transactions…
Of course, such an innovation will not happen in one year but despite the economic downturn, this revolution will happen. The question is not if but when? And the current answer is probably a bit later than initially hoped or expected by some vendors.
For a more detailled and personal take, have a look at my own blog here.
For consumer product strategy professionals, I think it implies the following:
1) look at historical data and facts of the previous recession (2001-2003) but bear in mind, this crisis is likely to be different for the tech industry.
2) listen to your customers TODAY. More than ever, consumer survey will be of great help to better understand consumer behaviour and fine tune product launches. In this regard, worth having a look at Paul Jackson’s report: "Consumer Spending in An Economic Recession".
3) work more closely than ever with the financial team when promoting big product strategy decisions. Business plans will be challenged.
* Updated January 25th: Nokia is now forecasting handset sales will fall by 10 per cent in 2009, double what the company was estimating just a month ago