3g enters the mainstream ...

"3G enters the mainstream - report
February 10, 2005

John Delaney, Principal Analyst in Ovum's Consumer Group

It's official: 2005 is the year that 3G mobile services mount their opening assault on the global mass market. We've already seen 3G emerge in specific geographies (such as Japan and Korea), from specific specialist operators (such as 3) and aimed at specific market segments (corporates). But now, we're finally seeing 3G services from tier-one operators all over the world, aimed squarely at mass-market consumers.

So will the big boys suffer from the same problems as the 3G pioneers did? Or will they be able to benefit from the experiences of those that went before them? The answer is: both.

One of the biggest problems that early 3G entrants faced was the lack of 3G handsets - those that were available were bulky, had short-lived batteries and unreliable call handover between 3G and 2G network coverage. Two years on, we can see a big improvement in both the range and the quality of handsets available, with smart-looking and smoothly functioning 3G phones on the market from all the major vendors. For example, Vodafone has launched 3G Live! with an opening choice of ten different handsets aimed at various different niche markets.

So the new wave of 3G entrants will have an easier time on the handset front. What about the other big issue that beset the pioneers: coverage? Here, we're more likely to see history repeat itself. The primary target customers are concentrated in the large population centres, so operators believe their geographically sparse, city-centred coverage is adequate to satisfy the early adopters. However, 3G services are used on mobile phones, and if they are really compelling then people will want to be able to use them wherever they are. If they can't, it will annoy them. These high- ARPU generators are the customers whom the operators can least afford to annoy.

Pricing of 3G services is also likely to be a significant headache for operators. People have proved resistant to the idea of paying GPRS traffic charges for content downloads and browsing. The former is like paying for postage and packaging: you will if you have to, but you won't like it much. The latter is like paying to go into a store and look around the shelves, and that's even less acceptable. In response, we've seen some operators' 3G portals move to content-only pricing, with no (explicit) user charges to find and download content from the portal. This fits well with the users' preferences - but raises the potential for a whole new set of difficulties in the relationship between operators and content providers. If an operator is not charging for network traffic, then it will need to demand an even bigger share of the content revenues from the content owners, who are already loudly complaining about how greedy they think the operators are being.

Global 3G is here at last, and we're about to get an early look at how appealing 3G really is as a mass-market consumer proposition. The potential is certainly there; but the road ahead, though smoother than before, still has some bumps that could yet prove big enough to stop the bandwagon before it has a chance to get rolling."


"3G Phone Sales to Double in 2005: Sony Ericsson
February 10, 2005 - source: BWCS

Sony Ericsson says it believes that 2005 will see it sell more than double the number of 3G handsets it managed to shift in 2004. The company said in a statement released on Thursday that it expects 10% of its phones sold this year to be next generation mobile handsets, up from under 5% last year. In the statement, the Swedish-Japanese company's CEO, Miles Flint, said "3G will become increasingly important as the year progresses."

Sony Ericsson, which ranks sixth in the global league of handset suppliers, behind Nokia, Motorola, Samsung, Siemens and LG Electronics, is set to announce its 2005 strategy at the 3GSM industry shindig at Cannes, later this month. It is widely expected that the vendor will focus its sales push on mobile music, this year, dubbing 2005 the "Year of Music."

In terms of 3G phones Flint said "Although 3G sales amounted to less than 5% of the overall market in 2004, we expect this segment to come close to 10% of overall volumes during the year with further rapid expansion in 2006."

Dominant mobile handset maker Nokia agrees with this prognosis and has already said that 25% of its new handsets planned for 2005 will be 3G compatible."