Mobile Phone Market Drivers

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T E C H N I C A L PA P E R

Understanding the Mobile Phone Market Drivers

A purely technical segmentation of the mobile phone market is no longer appropriate. Today, usage benefits are more important than technological performance and the generalization of mobile phones has complicated the market typology. Most mobile phone users expect a different language.

P. Antoine

UNDERSTANDING THE MOBILE PHONE MARKET DRIVERS
Consumer behavior is becoming more relevant than technology when it comes to understanding future evolution in the mobile phone market. As discussed here, a consumer-based marketing segmentation is becoming more appropriate in the mobile The mobile phone phenomenon is unique in the phone market. histories of both the telecommunication and consumer electronics markets. In less than a decade, people have adopted mobile phones on a massive scale, as a result of Usage Benefits are More Important which yearly global handset production will probably than Technical Performance exceed a record of 450 million units in 2003. This is Recent years have proved that in the mobile about three times the size of the television or PC communication world technological innovation can either markets. Growth has been fueled by the spectacular leave users totally disinterested, or lead to amazing evolution of mobile phone technologies, both in terms of market success. Two cases that epitomize these extremes performance and miniaturization. As a result, unlike are the failure of the Wireless Application Protocol (WAP) many other appliances, users change their mobile phones mobile Internet service and the boom in Short Message on average every two years. Consequently, replacement Service (SMS) text messages. handsets today represent about 80% of all mobile phone In 1999, the major players involved in the GSM market purchases. were preparing for a predicted “mobile revolution” that Currently, several families of standards coexist: Global would bring the Internet to every one’s pocket. The System for Mobile communication (GSM), Code Division promise was strong. Users were offered the ability to Multiple Access (CDMA), Time Division Multiple Access (TDMA) and Personal Digital Cellular Fig. 1 I-mode usage one year after the launch of WAP (1st quarter 2001); (PDC). There is not yet a source NTT DoCoMo, May 2001 “universal mobile phone”. In addition, each standard offers an I-mode Accesses iMenu Site Breakdown by Category *2 endless range of features. The difficulties are compounded by iMenu sites Ringtone/Screens Information the fact that different Voluntary web sites Games/Horoscope Transaction manufacturers and mobile Mail Other entertainment Database operators do not always refer to features and services by the same 4% name, although they may well 9% 25% appear similar to the users. 9/00 Therefore, trying to describe the 4% 41% 9% 35% market using a purely technical 14% 36% 32% 32% approach is not only complicated, 17% but also irrelevant when it comes to understanding its drivers and 19% 19% 32% inhibitors. Explaining user 19% behavior has become a key issue 3/01 34% 18% for all mobile phone players: manufacturers, operators and service providers. Most users are *1 The numbers represent the percentage of all accesses made as of September 2000 and March 2001. now experienced, having used a *2 % of each category out of total number of hits to iMenu sites as provided by content providers in mobile phone for an average of September 2000 and March 2001. 31 months.

Introduction

2 | Alcatel Telecommunications Review - 4 th Quarter 2003/1 st Quarter 2004

UNDERSTANDING INTERNET TO “TRIPLE PLAY”AND BROADBAND ENTERTAINMENT FROM HIGH SPEEDTHE MOBILE PHONE MARKET DRIVERS

SMS, it quickly became their main source of data browse the Internet from their mobile phones anywhere revenues and a sociological phenomenon, particularly at anytime. Manufacturers and operators made enormous among young people. Today, 97% of younger users...
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