Feature Bloat and Market Opportunity in Mobile Communications

Rachel Jones, founder of the UK user-centered design company Instrata reports in Usability News on research her company recently finished asking what mobile phone users in the United Kingdom and Europe over the age of 30 want in a product. She makes the following observations about the customer segments for mobile phones above the age of 30:

Some are technically advanced, using a range of other gadgets but with purpose and quality as their motivation. They primarily want to use their mobile for calls and texts, e.g. businesspeople communicating on the move – and would choose a simpler model over others, but only if it has the right look. They won’t use a mobile camera unless the photo quality is equivalent to their digital cameras, and so convergence will only be of interest if quality is undiminished.

Others may be uncomfortable with technology, but don’t want to advertise the fact. They often give up on mobiles, which come to live at the back of the desk drawer or in the bottom of the handbag.

Many potential customers just wish for a phone that is user friendly, and rate this as much more important than any other factor. Many in all groups have had free upgrades to phones that no longer suit their needs, and which have then caused unanticipated frustrations.

As Jones correctly notes, many customers want increasingly sophisticated functions in their mobile phones. Yet, as she adds, ” When phones are created for the older market they do not have the styling or personalisation that these consumers want, or if they do, the marketing concentrates on what they feel are the more patronising aspects of improved usability instead of innovation.” In other words, customers over 30 want mobile phones with simple features that provide a pleasant look and feel.

Jones research raised my interest because it provides insight into a basic change occurring in the mobile phone market. As DiamondCluster analysts, Sekino, Tripathy, and Gates point out in their discussion of the emerging market for Mobile Virtual Network Aggregators (MVNA), three out of four Mobile Network Operators (MNOs) in the United States are engaged in Mobile Virtual Network Operator (MVNO) business ventures, such as Virgin Mobile and Mobile ESPN. MVNOs package information content services with mobile phone subscriptions. Indeed, the market developing around MVNOs will provide incentives for developing the kind of simpler mobile phones with the “right look” that Jones’ reports consumers over 30 in the U.K. and Europe want.

So, how does this market development relate to customer experience and product development for mobile phone users? MNOs see the opportunity to collaborate with MVNOs to reach more customer segments, expand in non-traditional channels, and stimulate usage of data services. Yet, MVNOs are difficult to develop, typically needing scale to elicit favorable pricing terms on network leases with the MNO and the OEMs developing the handset. Additionally, the MNO typically contracts with Mobile Virtual Network Enablers (MVNE) for backoffice functions as well. Currently, no established players provide the missing link of brand development and feature specification. Sekino, Tripathy, and Gates contend a market opportunity exists for MVNAs who “contribute to the higher levels of the wireless service delivery chain, including offer development and handset customization.”

In other words, the sort of mass customization of mobile phones, and innovation in product development, that Jones calls for in reporting the research of Instrata becomes more likely to occur as the business model for MVNAs develops. As the DiamondCluster analysts summarize:

A DiamondCluster study of the potential for the private label model in the U.S. identified more than 300 potential brands and classified these across 30 categories of potential MVNOs, including advocacy groups, religious groups, celebrities, ethnic brands, cable TV channels, sports teams, casinos, retailers and magazines (see Figure 5 for the full list of categories). Each of these categories includes a minority of brands which combine access to large existing markets and potential to field appealing and targeted wireless offers. Altogether, approximately one-fourth of the brands rated high in terms of both reach and targeted offer appeal. UNIVISION, Google, USA Today, Fidelity Investments, Harley-Davidson and universities are examples of private labels that not only have addressable markets with millions of potential subscribers, but also have the content, services, reach or partnerships that could be leveraged to deploy differentiated wireless offers. (p. 10)

Copyright © 2006 by Larry R. Irons

Thanks to Putting People First for calling my attention to Jones’ research.

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