"The Mouth" on China's Quest for the Mobile Data Holy Grail
Former Ericssonian David Almstrom, aka The Wireless Guru, aka "The Mouth,"is a senior consultant at MFC Insight, a Beijing-based telecoms research consultancy.
>> The Quest for the Mobile Data Holy Grail (but will they race forever?)
"The Mouth"
David Almstrom
MFC Insight Update
Mar 24, 2003
The Holy Grail in the telecoms world seems to be a world where the cables and the air are filled with content - rich, expensive multi-media based content - which consumers are actually paying for. The Quest is there: To find the Mobile Data Holy Grail. And where else but in China will that Holy Grail be larger and sweeter and tastier...
Because everyone (including The Mouth) thinks there is a potential, a real potential, to provide mobile data services to the Chinese consumers. 230 million consumers must want advanced cool data services that are fun and productive, and this can stabilize ARPUs. Or maybe the Chinese consumers don't want content? Well, that is the Quest. And there is the opportunity to bring mobile data services to account for more than 25% of ARPUs in China. If so, this would mean a whopping yearly 20 billion dollar market!
The Race is On
China Mobile has already launched MMS and there are Java-based terminals out there that can download different kinds of applications. China Unicom has started to offer CDMA1X - the first commercial 3G technology - and they are now offering a number of different mobile data services, like "color e", BREW, mobile mail, etc. "Xiaolingtong" - the cheap PAS-based voice services - actually has very good data capabilities if/when China Telecom and China Netcom would like to activate it.
But set aside the operator development, it is quite interesting to see how the vendors are scrambling to put their pieces together, or shall we say, put their pieces in the mobile networks. They run, chase, kick and search. They know that there must be a Mobile Data Holy Grail in China. They can see that the Holy Grail has been found in the Philippines, Japan and South Korea - there is no reason why there shouldn't be a Holy Grail in China as well.
Qualcomm has maybe more intensively than any other company lobbied the Chinese government. They wanted to get acceptance for deploying CDMA in China, initially with China Unicom. In 2001, their dream came through and CDMA was launch by Unicom. Their focus has therefore moved towards making BREW, the preferred mobile data platform in China. Qualcomm is moving qualified people from San Diego to Beijing, setting up joint-ventures with Unicom to promote BREW, and they have seriously surrendered on their normal claims for royalty fees on BREW, related revenues. But will it work? Will Chinese consumers change their behavior and start downloading (and paying for) applications to the mobile phones? And more interesting, how many will actually have a BREW enabled phone to be able to do so?
Microsoft has desperately trying to enter the Chinese market in any way, not only in the mobile data sector. Microsoft wants Chinese manufacturers to build PDAs around the Pocket PC Phone Edition but have so far not had any great success. Recently striking a strategic alliance with China Unicom to provide .net services over CDMA1X might help, but there is still a long way to go before Microsoft - who has been trying for a few years now - gets any services deployed (and generates revenues) in China.
Nokia being both an infrastructure and a mobile phone supplier has created a special business unit just for this market: Mobile Software. Their strategy is to convince local phone manufacturers that Series 60 - Nokia's Open Source mobile phone middleware running on Symbian's OS - is what they need to improve their market position and sales. At the same, Nokia is seeking the operators' support that using Series 60 is the right way to provide unified mobile data services. Success? So far limited...
Ericsson, with a dominating GSM mobile market position, should be in a good position to tap into the mobile data market. They have been successful to the level of being able to place 2 MMS-C into China Mobile's network, but they haven't been put into operation. Instead, Huawei claims that they provided the only MMS-C in operation.
So maybe it will be the Chinese vendors who find the Holy Grail, but with a different kind of effort compared to the multi-national vendors. Instead of working with the operators and developers to identify, develop and promote mobile data services, they are simply providing products to the operators' specifications. Huawei has provided more than half of China Mobile's SMS-Cs and almost all IN servers. And ZTE has a strong foothold in China Unicom's SMS network.
Or will it be the smaller companies, with new technology and new ways of addressing the mobile data market that will be able to find the Holy Grail. Where embedded Linux systems (like Qtopia), running proprietary gaming engines (like Mophun) can be deployed at a low cost targeting specific segments, they might be able to stimulate new mobile services more effectively. Or specific access technologies (like IP Wireless's TD-CDMA solution) to address a certain niche segment that has high purchasing power - the corporate segment - that meets the need of corporate access and services.
What It Will Take
Looking upon China's mobile market, there are - as The Mouth understands - at least 4 Key Success Factors to make the mobile data market reach usage volumes beyond imagination:
i) Handset support; availability, ease-of-use and reasons for buying the phone all have to be there to drive the mobile data market.
ii) Market Segmentation; to identify the right segments to avoid extreme marketing costs and failure of non-usage.
iii) User Experience; where simplicity and education has to be emphasized to make the mobile data experience pleasant.
iv) Operator Understanding; that the operators need to understand and support their customers and work with others to deliver to expectation.
There are a number of key issues that can really block the rosy future of mobile data development in China. For example, operational issues within the operators of creating market and customer oriented organizations, where the customer and end-users are more important than simply doing the job. Chinese operators have invested in billing systems, portal software, BOSS platforms, CRM systems, data mining tools, etc. Very often, the systems are just installed and run at rudimentary levels of services.
China's operators have a history of calling a normal commercial trial, where the service and usability is trialed with a few, for a commercial service. Any user actually buying a service because they want to have it, will be disappointed and may never use it again, since the service wasn't stable or didn't fulfill their requirements. A trial is a trial, where the service will be improved as time goes by and should be ready for commercial services only when the service is stable and reliable.
There is also a risk that services launched are not compatible with the handsets. For an example, maybe a SonyEricsson MMS cannot be read by a NEC phone; or maybe Panasonic has installed a specific feature that only works on Panasonic phones and takes away from the user experience when viewed on another phone. Finally, there may be restrictions from regulations and policies that can block an uptake of mobile services. For example, there will be a lot of adult content floating around on the MMS phones.
There may be serious restrictions in what content that will be approved and how the operators are supposed to track and check how the users are using the services.
Given the complexity of mobile data services, the market is not yet mature enough in China, but behold, the Holy Grail is there, somewhere ... <<
- Eric - |
