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"I'm living in the future, so the present is my past" -Kayne West

The Wireless Battleground

So my RSS aggregator is chock full off 2 weeks of mobiledia news about all the latest and greatest wireless handsets. After reading the Q3 numbers it got me to thinking how the 4 major companies (accounting for 78% market share between them) would compete with each other in Q4 and 2006. So I’m taking this opportunity to make a few predictions along with recapping some of the more exciting mobiledia revelations. By the way, if you are a Cell Phone geek you should read www.mobiledia.com, most of the trusted news I get about the wireless field comes from them.

As far as Q4 goes there is no doubt in my mind that Motorola will crush the competition. There is only one idea cooler then the RAZR and that’s the ROKR, which includes iTunes on the phone. The music phone idea isn’t being widely accepted yet in the US, but the common reaction to the idea is always favorable. While I was bragging about my new RAZR phone to a friend recently, he immediately responded that he had gotten “the iTunes phone.” I know personally from the position of a wireless snob, I was very jealous. Luckily he was kidding and my ego was returned in tact with only a large bruise when it came to Music phones. Well in Q4 Motorola combines the two with the RAZR V3i (http://www.mobiledia.com/news/39386.html) which will put iTunes into the RAZR. This phone will be great. Motorola will also debut the RAZR V3c (http://www.mobiledia.com/news/39385.html) which brings the popular design to Verizon’s CDMA technology. This will increase Motorola’s market share in CDMA phones, and deal a direct blow to LG and Samsung. In Q3, LG lead both Motorola and Samsung by 9 percent market share in CDMA handset sales. In Q4, Motorola will top LG and Samsung, claiming number one in both CDMA and GSM sales. They will maintain if not increase the healthy 17% lead over Nokia in GSM markets spurned on by the iTunes RAZR, The new V360 for T-Mobile (http://www.mobiledia.com/news/39442.html) , and the new RAZR colors being offered (http://www.mobiledia.com/news/39384.html). All these Motorola winners will carry them into 2006 as a powerhouse.

Even as LG loses some of its CDMA market share to Motorola, I see opportunity for Samsung to take even more. Samsung just needs to continue its European innovation in slim phones (http://www.mobiledia.com/news/39443.html) in the US market. With fully featured phones under 15mm, LG doesn’t offer much competition. The cool factor is based on functionality and form. With Motorola offering functionality with good form, and Samsung poised to deliver form with decent functionality, things look bad for LG in the near future.

Sony Ericsson is looking to increase its 4% total market share with 3 new low cost handsets (J220a, J230a, and Z300a). Everything about these phones says it’s the free phone you’re going to want to put under the tree for your responsible 13 year old daughter. The very basic features, low cost, heck the Z300a even comes with “Crystal Décor” to decorate the phone with. Everything about this sector of the market makes me recoil in horror, but it does offer a viable customer base, and Sony Ericsson might just have made an incredibly good move here.

Nokia isn’t putting out sweet new handsets that make me drool and praise them here, but they aren’t exactly resting on their laurels either. With the 770 Internet Tablet Debut, successful HSDPA test, and purchase of Intellisync; they are making lots of moves. The 770 and Intellisync acquisition (http://www.mobiledia.com/news/39813.html) seem to point to a more mobile computing focused Nokia. I think Nokia will maintain wireless handset market share in the teens as it focuses in other arenas. Partnering with T-Mobile on the HSDPA (http://www.mobiledia.com/news/39758.html) will provide dramatically better download speeds and could maneuver them into a more innovative company similar to a current Qualcomm, which is at least kind of ironic since Qualcomm is currently suing Nokia (http://www.mobiledia.com/news/39331.html, Nokia’s response can be viewed at http://www.mobiledia.com/news/39329.html).

As far as Providers go I would rather not get far into depth on it. I think Cingular and Verizon will rule the day in Q4. Cingular’s history of innovation (I still remember being jealous of a girlfriend who had “real music” for her ring tones, a Cingular-only service at that time) and Verizon’s level of Customer Care are both great selling points. Verizon has the network, the customer care and now the RAZR, and Cingular has the popularity with the young demographic, and all sorts of cool phones. As far as the future goes, I can’t wait to see what T-Mobile does with the HSDPA.

Targeted Advertising you might not hate!

I really can’t do this one justice, you’re going to have to visit the link on this one. According to mobiledia, PromoTel (one of the main companies behind ring-back tones) is pushing to replace all ring-back tones (the ring ring ring you hear when waiting to connect) with targeted advertisements and then allowing customers to make unlimited free calls. That sounds amazing to me, I will listen to some 10 second plug to talk to grandma for free. Unfortunately, I’m convinced that’s not what will be happening. I see a future where phone bills are exactly the same cost but can pay 4.99 a month not to hear the latest crappy offer. That’s much more likely then free phone plans, even if it does represent “close to 14 Billion Dollars” in revenue for the wireless industry. Sorry grandma, but I don’t think we’ll be having any 2 hour long free conversations.Note to PromoTel – If you’re in need of a beta tester for this Free unlimited calling thing, I’m your man!

The Cell Phone Society

3Q sales have come out as reported by The NPD Group. The prospective numbers are pretty telling. 2 Billion In sales, a 7% percent increase over last quarter, 30% over this quarter last year. Not only do everyone and their grandma now have a cell phone, but many people are buying them like candy. The situation is getting dire as more and more people become like me.

I spent 15 months employed at my local Circuit City during my last two years of High School. The first 6 months of that were working in the Wireless Department. To bad we aren’t talking about a record 2Q of 2004, because then I could claim it was all my doing. Anyway while I was selling all the latest and greatest gizmos I fell in love with my cell phones. So when I finally made the jump to Verizon I decided to buy two phones. Yes it was a complete waste of money but I would keep both on me and switch back and forth depending on what functionality I needed. My Samsung was a trooper when it came to battery life, and my Motorola was loaded to the gills with so many cool features that even an extended life battery barely kept it running for more then a day and a half (and I was often away from a charger for longer). When I left for Europe I knew I would have to cancel my Verizon service and due to the CDMA platform I would have to buy a GSM phone that could support European SIM cards. So in the roughly 3 months I was in Europe, I bought 3 GSM phones. Yes I am a very sick individual. I purchased a Nokia with horrid sound quality, a very functional Siemens phone, and the uber-sleak Black Motorola RAZR V3 (The top selling handset of Q3). The RAZR will continue to make even more money for Motorola with a CDMA version and new colors appearing in Q4.

So If you are keeping a running Tally, that’s 5 phones I’ve purchased in the past 10 months. That’s one phone every 2 months. That’s a disgustingly materialistic reality. So when this years Q3 numbers are beating last years by 30% I wonder if it is purely a reflection of increased users, or if the number of Power Users who own multiple phones they switch to for various purposes (which is about 1000 times easier with GSM) is increasing.

Could this trend open up the possibility of returning to profiting on the hardware rather then the service? The American phone market isn’t saturated enough to warrant that yet. I do see a possibility that creative hardware and price plan opportunities will present themselves, and may indeed prove the only way for small companies to battle network giants like Sprint, Verizon, Cingular, and T-Mobile.

Watch the power users, especially as Mobinet’s new research has indicated that data services are on the rise (http://www.mobiledia.com/news/39129.html).

Some other interesting tidbits from Q3 numbers show that Motorola is leading the GSM market, and the LG is still riding its popularity (which was all but secured with the VX6000 back when I was selling them) in the CDMA market. Motorola also commands almost double market share as the 3 second place finishers; Nokia, LG, and Samsung.

About the Author

Tyler Willis is the Vice President of Business Development at Unified, which builds enterprise marketing technology for brands and agencies.

This blog is about how the future will affect technology, marketing, and the things we care about most. Learn more about Tyler.

Speaking

Tyler is a featured speaker and instructor for The American Marketing Association, and is a popular speaker on topics related to social marketing and how technology is changing our lives.

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Lightweight Update

I write infrequent (quarterly at most), semi-formal updates of what I'm doing and thinking.


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