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Tablets are going mainstream. More 3G subscriptions but less calls and SMS…

iPad 2, Samsung Galaxy Tab, Motorola Xoom, Notion Ink Adam, ASUS EEE Pad, Dell Streak / Looking Glass, Archos, Acer Iconia, LG Optimus Pad, Viewsonic ViewPad, Kno, Hannspree Tablet, etc. The list goes on and on. 2011 will be the year the tablet went mainstream. Thank you Steve Jobs!!!

Although a good percentage of tablets will come with 3G connectivity, and even 4G future-expandable connectivity, does this mean that telecom will get another cash-cow? I do not think so!

Yes operators will sell another SIM and the associated monthly data charges. But with people having to buy multiple SIMs, they will want to see discounts. Users will want plans that focus mainly on data. This means to have price plans that reduce calls and SMS monthly costs to the minimum. The idea is that they would use their phone to call and their table to surf.

However what is likely to happen is that users will come into situations where they want to communicate with people from their table. Since calling and sending an SMS is too expensive with their tablet data subscription they will install more and more instant messaging and VoIP apps. Pretty soon users will get accustomed to use video chat instead of just voice calls.

The end result will be a boost to IM, VoIP and video chat apps. If you use them on your tablet, then you are more likely to also start using them on your iPhone or Android. The final result might be that subscription revenue goes up for the operator but call and SMS revenue goes down significantly as well. Perhaps the overall outcome in revenue is positive but the final result is that at the end of 2011 operators are seen as data plan providers, a.k.a. bit-pipes.

There is no quick fix for the operators. Launching some operator-build tablet apps will not reverse the curve. Nobody wants Faceclone or SMSitter. People want the real thing.

A drastic shift is necessary in the operator to form part of this new eco-system, see long-tail telco.

 

What is your next move? Moving free to telecom or paid to the mobile Internet?

December 12, 2010 2 comments

At the moment teenagers are accustomed to paying for SMS (bulk tariffs) and voice calls (if they use them at all). However since mom and dad pay, they are just worried about staying below their parents ‘ anger limit.

Everything else in the digital world is free to them. Either legally free from the likes of Facebook or Twitter or illegally free from the likes of eMule.

We are at the doorstep of most teenagers switching from SMS enabled phones to smartphones and tablets. This means that there are two possibilities: telecom becomes free or mobile Internet becomes paid.

My guess: telecom becomes free. SMS will be substituted by Twitter and Instant Messaging. A 100-300MB of data traffic can easily pay for thousands of instant messages and social network updates. Likely free mobile apps that optimize data exchanges will be very popular with teens. The net effect will be that teens will no longer see the relationship between sending a message and paying for it. This will prompt them to move massively to the free mobile Internet.

However is there a way to move paid to the mobile Internet?

Not at the current prices. History would repeat itself like in the music industry. A digital technology comes but Hollywood tries to maintain an artificial high price even if distribution prices fall close to zero. CDs cost cents. Digital distribution even less. However you still find CDs that cost more than €15-€25. The result is that teenagers find ways not to pay.

How to do it differently? Move from micropayments (5-15 cents/SMS) to nanopayments (0.01 or 1 cents/event), micro-subscriptions (5-15 cents/month) or freemium. If mobile app designers could have access to a simple interface to charge nanopayments on your phone bill in a uniform matter, then they would not give you an article for free but they would want you to pay 0.05 eurocents for it. You wouldn’t mind such a small fee but lots of nano-cents convert to real money for a successful site. Also micro-subscriptions would allow teenagers to subscribe to a premium service without having any parents worried about phone bills. The last business model (freemium) has been described in another article.

Failure to teach today’s teenagers to pay for the Mobile Internet will mean that free will be tomorrow’s only Digital business model. This is not necessarily bad for site owners that can find ways around it via advertisement or selling customer’s data. However telecom operators will see their only income come from monthly subscription fees that will only go downwards…

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