The last two decades have been good for cellular phone companies like Verizon Wireless, T-Mobile and AT&T. Demand for mobile phone and e-mail services has risen dramatically, and profits have followed suit.
Carriers have found more and more creative ways to boost revenue. The once-humble cellphone has become an entertainment hub that takes photos, sends e-mails and plays songs, all to the benefit of wireless operator bottom lines. Case in point: Verizon Wireless' net income has grown at a compound rate of 33% a year since 2003, hitting $9.6 billion in 2006.
Signals suggest, however, that wireless providers who aren’t careful might find themselves victims of a devastating disruptive assault from emerging technologies and business models. It may seem strange to suggest that seemingly dominant incumbents should worry about currently invisible attackers. But if history is any guide, it's not strange at all.
In industry after industry, seemingly trivial entrants have used the power of disruptive innovation to drive change. In the wireless industry, disruptive attackers--ranging from start-ups like Blyk and FON to more established companies like Google (nasdaq: GOOG - news - people ) and Skype--are now building momentum with incumbent wireless carriers in their sights.
Ironically, the wireless industry’s history traces back to disruptive innovation. The first mobile phones had low voice quality, limited battery life, were bulky and expensive. But they offered something that land line telephones could not match: The capability of placing and receiving calls while mobile.
Quality has steadily improved, and customers are increasingly choosing the convenience of wireless technologies over the rock-solid reliability of their land line phone. Since 2001, more than 25 million landlines were discontinued domestically in favor of the use of wireless telephony.
And yet, substantial evidence suggests that the cellular wireless operator industry in the U.S. may now find itself the "disrupted," rather than the "disruptor."
History has shown that disruption is most likely when supply-driven and demand-driven forces intersect.
On the supply side, disruption tends to occur when the pace of technological progress “overshoots” the level of performance that customers are able or willing to consume.
There are signs that wireless operators have overshot the mainstream market. Despite billions of dollars invested in network upgrades, only one out of every three domestic wireless subscribers presently utilize “2.5G” services such as multimedia messaging and ring tone downloads. Despite the hype surrounding third-generation (3G) wireless connectivity, fewer than 10% of domestic wireless subscribers utilize 3G services such as music downloads or streaming video. It is possible that wireless providers are supplying too much performance for the mainstream market.
On the demand side, disruption occurs when entrants use new technologies and business models to throw market-leading incumbents off balance.
The combination of the dramatic growth of new wireless Internet access technologies such as WiFi, the ability to use Voice over Internet Protocol (VoIP) to make voice calls and the potential rise of companies willing to give away wireless service makes disruption a real possibility.
WiFi hotspots and municipal WiFi coverage have and will continue to explode. By 2010, more than 65,000 public WiFi hotspots are expected to be in place domestically, and spending on municipal wireless infrastructure is expected to exceed $500 million. Many emerging WiFi business models feature flat rate, unlimited usage pricing similar to home broadband.
On its own, the growth of WiFi threatens wireless carriers who are increasingly reliant on high-end services. Then consider what happens when emergent companies layer in VoIP over WiFi. Since VoIP translates voice communication into data, companies could charge a single flat rate that covers unlimited Web surfing, file downloading, e-mail and phone calls.
But wait, the disruption is just beginning. What happens if companies go beyond charging a low flat rate that undercuts wireless carriers? What if they actually give away wireless voice and data service?
Free wireless access for all may be the wave of the future. In January 2006, serial entrepreneur Martin Varsavsky launched FON, an open WiFi community where members agree to share their broadband Internet connections through WiFi access points in return for the ability to use the WiFi access points of other community members. Just one month later, FON received financial backing from Google, Skype and a number of prominent venture capital firms.
Then, in mid-November, Google CEO Eric Schmidt said more money could be made if cellphones were free and users spent more time online, viewing ads, playing games and downloading content. Around the same time, Pekka Ala-Pietila, once the president of Nokia (nyse: NOK - news - people ), and Antti Ohrling, CEO of the advertising agency Contra, announced plans to launch Blyk, the first free, ad-supported wireless carrier in Europe.
What's a wireless carrier to do? Companies like Verizon and AT&T (nyse: T - news - people ) should consider shifting focus to customer retention and away from profit maximization. Rather than always seeking to liberate the last dollar from customer wallets, they should seek to deliver exactly what customers want. Also, providers should consider creating separate organizations to experiment with new technologies and business models. If profitable, sustainable strategies emerge from these new organizations, companies should give them the resources they need.
While it is impossible to predict the future, preparation and pre-emption are both essential. By the time the disruptive forces are obvious, it is too late to respond.
Nenhum comentário:
Postar um comentário