The mobile business industry panel tackles topical issues
70% of mobile users in Britain have replaced their phone in the last 18 months. Given the saturation of the market, is that frequent enough? Should we be encouraging them to move on to new phones more often?
The result, in my opinion, will be that customers will become spoiled for choice and the present 18-month cycle referred to may well reduce to something closer to 12 months or even lower.
The UK market segmentation models utilised by both manufacturers and operators have become particularly sophisticated and will grow ever more capable of refining target audiences right across the spectrum, covering detailed analysis of consumer trends as well as the SOHO users, SMEs and larger corporates.
While fashion will largely continue to dictate the handset replacement market, it is evident that a substantial and growing proportion of users are becoming more knowledgeable about technological developments and the resulting capabilities of handsets. Consequently, they are growing more demanding with their handset requirements in terms of both features and functionality.
That said, it can be safely assumed that of the 30% who have not replaced their phone in the last 18 months, a significant number will be those whose priority is simply to have a device for occasional talk and texting. Improved technology and capabilities, stylish new designs and tempting tariff changes will largely pass them by. Content with what they’ve got, we’ll be lucky if they change their handsets in 18 years!
Seaton, Airwide Solutions: Encouraging users to upgrade handsets is a futile cause. When phones were cheap and had basic features, it was easy. However, now that users pay hundreds of pounds for a phone, take the time to populate them with personal data, and invest a lot of time learning the sophisticated features and shortcuts, they are not as willing to go through the hassle of changing phones. The focus should be less on trying to get users to switch phones and more on getting users to keep their phones. Users should be encouraged to learn to use more features and download more applications, which will in turn get them to adopt more services. Arguably the additional revenue generated from increased use of services will far outweigh the revenue gained from selling a heavily-subsidised new handset.
Director of Marketing, Fone Logistics
VP Product Management, Valista
Director, Sales & Marketing, Elite Mobile
CMO, Airwide Solutions
It is therefore little wonder that 70% of mobile users have chosen to replace their mobile phones. However, given the high handset subsidies operators currently provide to post paid users (and to a much lesser extent to prepaid subscribers) wishing to upgrade their phones, allowing or encouraging more regular upgrades will either increase operator costs or make handsets more expensive. Both of these options would be costly and therefore act as a deterrent to customers wishing to upgrade. In addition, encouraging more frequent upgrades would no doubt raise questions from environmental groups who are already concerned about the increasing number of redundant phones not being recycled.
Parven, Fone Logistics: This situation is a challenge across the industry.
We’ve seen the rapid growth of 18-month contracts (consider the penetration of T-Mobile Flext 35 between March and June) and the associated extension of handset life cycles beyond the previous 12 months. That has resulted in customers hanging on to their hardware for longer – and it will continue to do so.
The 18-month contracts preclude early upgrades in most instances. That means dealers are making hay now while the commissions are high, but their businesses will inevitably suffer as the upgrade/churn commission window is extended beyond the 11th month.
From the customers’ point of view, the handsets sold today have an extended shelf life as the technology is more robust, although the proliferation of new handsets into the market inevitably drives demand.
The key area of attention for dealers will be how well they retain their customers in order to bridge the financial gap between the 12- and 18-month windows for re-signing.
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