re: FT on GSM & 3G Parallels
This article was published the same day as Julian Herbert from EMC published History Shows GPRS/W-CDMA Delays 'Absolutely Predictable' and deals with the same subject matter:
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Much of the anti-3G rhetoric has originated in America. US-based Qualcomm is claiming that the cdma2000 1x standard is the future of mobile technology, not UMTS 3G, but objectively, Qualcomm is now looking increasingly isolated on the world stage.
>> Despite Setbacks, 3G Will Transform Our Mobile Lives: Viewpoint On Third-Generation Services
John Buckley
Bjorn Krylander
Financial Times
Nov 21, 2001
globalarchive.ft.com
The business press has been highly critical of 3G technology. But a decade ago media commentators were equally dismissive of GSM, and their forecasts proved to be ill-founded
"Much of the initial enthusiasm for the concept appears to have evaporated and the original launch target of autumn this year has been slipping...when the government asked companies to apply for...licences, international consortia rushed to compete.
"Since then, the UK economy has sunk into recession, forecasts of the number of...subscribers...have been scaled down and the need for heavy investment has scared many of the original shareholders."
Sound familiar? More doom and gloom about 3G technology? In fact, this is an excerpt from an article in the business press in September 1992, on the future of GSM mobile communications. And yet GSM now works across the world. Today, 600m people in the world have a GSM mobile phone (creating a market worth Dollars 60bn a year) and this figure is expected to reach 630m - 10 per cent of the world's population - by the end of this year.
Nearly a decade later, third-generation (3G) mobile technology has been the object of similar criticism. But just as the pundits were proved wrong about GSM, we believe they are mistaken with 3G, which will come to be a dominant global force in telephony. The anti-GSM negativity that proved so ill-founded is now being echoed in this 3G backlash, with commentators taking 3G to task, as before with GSM, for perceived issues with spectrum, features and cost.
There is no escaping the fact that there will continue to be technical difficulties. After all, 3G is pushing the bounds of physics, being at least one order of magnitude more complex than GSM. Unsurprisingly, there are delays in announced launch dates.
Compared with most advanced 2G handsets, 3G handsets will initially be bulkier and less competitive on talk time and standby time. The change to 3G technology will not, however, set us back to the early days of 1992/1993, as some pessimists predict, but perhaps to the performance of 2G phones from 1998/1999.
Viewpoints
Critics maintain that the launch of higher-speed cellular networks risks being a flop because the new wave of non-voice services and applications is not sufficiently attractive - and the tariffs are likely to be too high - to persuade users to sign up in large numbers.
There is undoubtedly a huge marketing job to be done, just as there was with GSM, although recent announcements from Japan indicate enthusiastic market acceptance of pioneering 3G telephone services (such as video on 2.2in terminal screens).
The key to success lies in the hands of the operators. The roll-out of services, the packaging and pricing of services, and the management of user expectations will be critical to gaining broad market acceptance. It is a familiar story - the same issues concerned the operators of GSM services in the early 1990s and commentators were equally dismissive about the outcomes.
Much of the anti-3G rhetoric has originated in America. US-based Qualcomm is claiming that the cdma2000 1x standard is the future of mobile technology, not UMTS 3G, but objectively, Qualcomm is now looking increasingly isolated on the world stage.
Global momentum is now so firmly behind 3G that its market share looks likely to be even more dominant than that of GSM. Successful 3G trials have happened across the world, and last month saw the official launch in Japan of NTT DoCoMo's 3G technology, Foma or Freedom of Mobile multimedia Access (see report, page 6).
The business press has been equally vocal in its criticism, but as we have shown, media commentators were equally dismissive of GSM, and their views have not been vindicated. Onlookers, such as investment analysts, have pointed to the high cost of 3G, but this argument confuses cost (impact, degree and speed of take-up) with likelihood (whether or not take-up happens at all).
Although we accept that, apart from the marketing challenge, operators may have to modify some ambitious expectations on pricing, this does not mean that 3G will not happen. It will, and in a big way.
Firstly, the 3G networks will be built. The orders for these networks have already been placed. Secondly, 3G devices will be created. Hutchison Whampoa, for example, announced on November 1 that it had placed an order with NEC for more than a million third-generation videophones.
Thirdly, and more importantly, customers will buy 3G. Technological developments, including integration into PDAs and PCs, will lead to advances in acceptability and price reductions for 3G - eventually leading to massive acceptance of the technology.
The technology will support a plethora of new services. Expectations are high that 3G will deliver music videos, football highlights and newscasts, whenever, wherever, at low cost.
Some of these expectations will be delivered, others not, but market forecasts suggest that once third generation networks begin operating, gambling games, ringtone downloads, video clips and other such services will be generating Dollars 12bn in revenue in Europe alone by 2005.
As with the earlier technologies, it is person-to-person communication and interactions between people that will drive third generation services, rather than passive consumption of media.
It is impossible to predict what the winning services will be, but we believe that electronic postcards, instant messaging, interactive gaming, video calls and new means of communicating will drive end-user value.
And this is not just theory. Devices used in NTT DoCo-Mo's Foma launch include a camera phone, which displays your conversation partner in the same way as a video conference. In the UK, activity will start at the end of next year when Hutchison 3G, one of DoCoMo's global business partners, rolls out the system.
In conclusion, we do not believe that 3G will turn out to have been "a frantic and ill-judged lunge" by mobile phone operators, as writers have suggested.
If the past is anything to go by, the investments they are now making will lead to a technology explosion that will, over the coming years, transform our mobile lives.
John Buckley is a member of PA Consulting's management group. Bjorn Krylander is chief executive of PA's wireless technology venture company, UbiNetics <<
- Eric - |
