We like to complain in the US about how AT&T's network has been overwhelmed by the iPhone. But despite some big challenges, several reports have shown that AT&T's network is not so terrible in most places and it's data service is actually better on some measures than Verizon. Indeed, all four US mobile networks set a very high standard in terms of service and reliability. In Europe, Korea and Japan, high population density and even higher wireless service prices fund an even higher standard of service.
At the other end of the spectrum are markets like China, India, and much of Africa. In these markets, wireless pricing is a fraction (and I mean a small fraction) of US pricing. Per minute voice rates are 80% lower than in the US and data pricing is also much cheaper.
Carriers in these markets have to work hard to make money. They operate simpler infrastructures and they accept lower standards of service as well. And they stretch their infrastructure over a much bigger user base. As a result: even without large numbers of smartphones, networks in emerging markets are already jammed to capacity.
Right now, a small core of urban professionals in China and India are walking around with iPhones and Blackberries. In the coming 2-3 years, that will change dramatically. Just as the first cell-phones transformed communications in these markets, cheap smartphones and connected tablets with revolutionize access to the internet as well.
At $500, the iPad is just within reach for the middle class in emerging markets. Apple enjoys a hefty margin on that device - somewhere between 30-60% depending on the model. While Apple isn't going to be engaged in any slash and burn price war, the same won't be true in the Android space. In 2011, we should start to see large numbers of Android tablets in the $200-300 price range and prices will drop from there. And those devices will quickly become ubiquitous in the developing world.
The demand for mobile broadband that will come with these cheap connected tablets will push many network operators in emerging markets into rapid consolidation. In these price sensitive markets, raising rates may not be a feasible option without dramatically affecting demand. The alternative will be rapid consolidation to drive out cost and fund a rapid transition to LTE.
This will create a huge new set of opportunities for the world's mobile network equipment providers, primarily Ericsson and Huawei. It could also reset the cards in the global market for smartphones and tablets. Right now, most of these devices are bandwidth hogs - architected as if bandwidth was free. But it doesn't have to be that way. The Blackberry consumes a fraction of data used by an iPhone. Implementing some of the same highly efficient approaches used in the Blackberry in the more general purpose and consumer devices could give the company that does so a significant competitive advantage.
Indeed, the strongest play might be an integrated solution from a network equipment operator and device maker, using both device smarts and network intelligence to manage data consumption. So far, no signs of such a solution in making, however. So next time you're in India or Shenzhen, bring some patience with you, because you data connection is going to be very slow.
Overloaded here, there, and everywhere: (Photo Flickr
CC, Chuck Coker)
At the other end of the spectrum are markets like China, India, and much of Africa. In these markets, wireless pricing is a fraction (and I mean a small fraction) of US pricing. Per minute voice rates are 80% lower than in the US and data pricing is also much cheaper.
Carriers in these markets have to work hard to make money. They operate simpler infrastructures and they accept lower standards of service as well. And they stretch their infrastructure over a much bigger user base. As a result: even without large numbers of smartphones, networks in emerging markets are already jammed to capacity.
Right now, a small core of urban professionals in China and India are walking around with iPhones and Blackberries. In the coming 2-3 years, that will change dramatically. Just as the first cell-phones transformed communications in these markets, cheap smartphones and connected tablets with revolutionize access to the internet as well.
At $500, the iPad is just within reach for the middle class in emerging markets. Apple enjoys a hefty margin on that device - somewhere between 30-60% depending on the model. While Apple isn't going to be engaged in any slash and burn price war, the same won't be true in the Android space. In 2011, we should start to see large numbers of Android tablets in the $200-300 price range and prices will drop from there. And those devices will quickly become ubiquitous in the developing world.
The demand for mobile broadband that will come with these cheap connected tablets will push many network operators in emerging markets into rapid consolidation. In these price sensitive markets, raising rates may not be a feasible option without dramatically affecting demand. The alternative will be rapid consolidation to drive out cost and fund a rapid transition to LTE.
This will create a huge new set of opportunities for the world's mobile network equipment providers, primarily Ericsson and Huawei. It could also reset the cards in the global market for smartphones and tablets. Right now, most of these devices are bandwidth hogs - architected as if bandwidth was free. But it doesn't have to be that way. The Blackberry consumes a fraction of data used by an iPhone. Implementing some of the same highly efficient approaches used in the Blackberry in the more general purpose and consumer devices could give the company that does so a significant competitive advantage.
Indeed, the strongest play might be an integrated solution from a network equipment operator and device maker, using both device smarts and network intelligence to manage data consumption. So far, no signs of such a solution in making, however. So next time you're in India or Shenzhen, bring some patience with you, because you data connection is going to be very slow.
No comments:
Post a Comment