Wireless

by Carlo Longino




Is Price The Only Thing Mobile Customers Really Care About?

from the falling,-falling dept

It may be a little surprising to learn that mobile number portability (the ability to keep the same phone number when switching providers) wasn't introduced in Japan until last week. MNP's introduction has set off a fierce round of churn in Japan -- rather unlike what happened in the US -- as operators look to steal customers from their rivals. Given that Japan is such a mature and advanced market, it's not surprising to see operators trying to compete on the basis of their content and data services, such as KDDI trying to lure customers in with its music offerings. But even with Japanese mobile users' widespread and long-standing use of mobile data services, when it comes down to it, it appears all they really care about is price. Softbank, which purchased the country's third biggest operator, Vodafone KK, earlier this year, said its strategy to grab new users would be to start a price war and undercut NTT DoCoMo and KDDI, its bigger rivals. People have apparently flocked to it in such large numbers that Softbank had to stop taking new customers twice over the weekend because its computer system couldn't keep up. While Softbank isn't disclosing any numbers, there's widespread belief that it's already gained a huge number of new subscribers. Mobile operators around the world tend to hate competing on price, because the only real overall effect is to lower their average revenue per user. If operators in one of the world's most advanced markets can't use data and content services as effective differentiators against low prices, it may not bode well for operators in other, less advanced markets.

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  • identicon
    Jaded as hell, 30 Oct 2006 @ 12:13pm

    Phone companies don't listen

    I've been trying to just have a damn phone for 5 years now (went completely cellular then), and every time I try to get less minutes (I'm not a talkative person) and less features they keep trying to shove new stuff down my throat. I just want a freakin' phone damnit!
    ...yeah...need to lay off the sugar a bit.

    reply to this | link to this | view in chronology ]

  • identicon
    Gan-San, 30 Oct 2006 @ 12:30pm

    Yeah...

    All they do is try to sell crappy over priced phones with useless over loaded plans. I don't need an extremely slow data connection, on a phone whose browser is crappier than lynx... but then again I don't have a choice. Maybe I should get my friends to buy 2-way radio's... would be kind of hard with the whole long distance thing.

    reply to this | link to this | view in chronology ]

  • identicon
    jsnbase, 30 Oct 2006 @ 12:32pm

    I'm not following your logic

    That is, I understand what you're saying, I just think you're wrong.

    If it's such an advanced market and all of the providers offer a robust selection of content, why does price as a differentiator seem so shocking? In this context, I would take 'advanced' to mean that they've already been through the point where everything is expensive, the point where somebody gets cheaper, the point where everybody else gets cheaper, the point where somebody offers a premium service for a premium price and the point where everybody has a premium offering. Now they're back to a price war. It's the Economic Circle of Life.

    This doesn't bode anything for anybody except economics professors.

    reply to this | link to this | view in chronology ]

  • icon
    The Dukeman (profile), 30 Oct 2006 @ 12:48pm

    Price is the limiting factor

    The keys to profits in any service based industry are customer quantity and customer retention. You get more new customers by having affordable and reliable service. You keep more customers by having affordable and reliable service. Just think how many new customers ANY cell provider could have by just having an affordable service plan. There are thousands upon thousands of disabled and elderly people who can't afford a cell phone even for emergencies. And they are the ones that need them the most.

    reply to this | link to this | view in chronology ]

  • identicon
    Tack, 30 Oct 2006 @ 12:51pm

    On point

    jsnbase has hit the nail on the head. cell phones aren't (in the grand scheme of things) and different than most other markets. a product is created, and when it's new, it's expensive. then someone does it cheaper. then everyone does it cheaper. then while everyone is cheaper, most of them realize they need some new feature for people to pay more money for, to bring prices back up. then everyone makes a new feature (often simply copying each-other) and the prices go back up until this new feature becomes old, when they decline. It is in fact a circle.

    A good example of this (and for that matter a good example of everything) is the automobile industry. 3 to 4 years ago, GM couldn't hardly sell a car. their prices got too low and they realized they had to add new features. OnStar and XM Radio (along with Sirius radio in Ford vehicles) has given GM (and ford) a new feature, and a 2007 Lincoln Navigator costs more than a 2005 Lincoln navigator did (even in late 2004 when they were new) due to this new feature, which Toyota, Honda, and the others have not matched. Just the same, Toyota has their Prius, a car which despite all odds sells for more used than it does new sometimes. In 3 to 4 more years, these features will become standardized. There will be Chevy Silverado's running on either a Hybrid or Ethenol (or both) just as there will be XM Radio in the 2010 Prius, and once this happens, prices on both the GM/Ford cars and the foreign cars will fall. By 2014 or so, somebody will have developed a Hydrogen car a person can actually afford, or a Tesla Roadster (the super-expensive celebrity electric car) will be "cool" instead of a Hummer, and those types of cars will become expensive - either GM and Ford will create Hydrogen and Electric variants (like the now defunct E1 GM made way back) or they'll just go bankrupt one day

    reply to this | link to this | view in chronology ]

  • identicon
    Tom H, 30 Oct 2006 @ 12:55pm

    There is a solution for that

    Its called prepaid 20 every three months for a phone for emergencies is not a bad deal.

    reply to this | link to this | view in chronology ]

  • identicon
    Tack, 30 Oct 2006 @ 1:04pm

    Good point but bad example

    Dukeman, yes I agree they could make god mo0ney off people who simply want a small amount of minutes for a small amount of money (50 minutes for 10 bucks sounds fair to me.) However, if you didn't already know, any GSM-based phone (or all the ones I've had since I got a cell phone over 8 years ago) has an "SOS" feature which allows anyone to make a 911 call on that phone so long as it is in range of any compatible tower, even if the phone has no service plan and even without a SIM card in it. The phone can be completely deauthorized off the network but it can still make a call to 911. If you ever notice on your cell phone bill amongst those small 20-to-50 cent taxes they tack on (totalling $1.83 on my bill, usually) there's one that pays for these emergency calls. In effect, we all shell out money for that feature in case some elderly person is stuck away from a landline phone and needs to get help, however I agree very few people notice this.

    If your phone is a GSM phone (Cingular, Alltell, T-Mobile, and some others) try removing the SIM card and booting it and you'll see what I mean. You can also get an older phone (a good example is the nokia 3390 offered by both t-mobile and cingular as a contract phone around 1999-2000 for free with the contract) and often these work best. The 3390 in particular works as it has no data capabilities, can be bought both cheaply and in bulk on ebay, gets reasonable battery life (2 days of standby even with full usage and service, 4 if used properly) and also has one really big, center button, which takes the SOS function when it's turned on, making it ideal for elderly people with poor or no vision (i.e. "just feel for the big center button.")

    I wasn't sure if you knew about this or are perhaps looking for a phone and/or plan for a parent, etc, but now you know. Just a tip.

    reply to this | link to this | view in chronology ]

  • identicon
    Howard Lee Harkness, 30 Oct 2006 @ 1:05pm

    "either GM and Ford will create Hydrogen and Electric variants"

    Using hydrogen to power a car is insanely stupid. Not only is it horrifically expensive, it's not even 'green' in any meaningful sense. Plus, it has a very wide explosive air mixture. Releasing all of the energy of a tank of gasoline instantaneously is very difficult, but with compressed hydrogen, it is trivial. It would be easy to modify a 600 bar hydrogen tank with 8-10 kg of hydrogen to be a very effective terrorist bomb, and would take only a few relatively cheap components -- so it's only a matter of time before it happens.

    OTOH, the EV has some promise, especially with a new breakthrough in lithium batteries that promises no more explosive thermal runaway, incredibly fast charge time, and more than 9000 cycles.

    But the real future of alternative fuels is biodiesel -- it can be made cheaper than dinodiesel, it's cleaner-burning, and much safer than hydrogen (or even ethanol). Plus it can be used in unmodified diesel engines.

    reply to this | link to this | view in chronology ]

  • identicon
    SimplyGimp, 30 Oct 2006 @ 1:16pm

    Yep

    I hadn't even had a color display phone until this year. I personally saw no point in it. Unfortunately the antenna broke. My replacement was one of the cheapest most simple phones from Cingular and it has a color display, camera, video recording and a myriad of features I never use. Exactly why I had my greyscale phone for 3+ years. ALL I NEED IS A DAMN PHONE! Yet all you can find now days is portable media centers (aka cell phones). To top it off, Cingular phones have this moronic little button, when pressed, automatically connects you to their wireless 'web' network, instantly charging you for data transfered. To disable that, you have to change some network settings in the phone.

    It's completely stupid. There are still customers that NEED and only WANT the most basic of hardware and plans, but these idiot cell companies only supply hardware to sell their features. Here's a big middle-finger to the cell companies!

    P.S.
    If you have the time to type out a text message, you had the time to call that very person and leave a voicemail.

    reply to this | link to this | view in chronology ]

    • identicon
      Phil, 31 Oct 2006 @ 7:35am

      Re: Yep

      Right on,

      All I need is a phone that makes calls and the battery doesn't go dead so fast. I had a Nikia 1100 last year, it was fantastic, it made calls, super uasy to txt and the battery lasted a week. if I want a damn PDA I'll buy one, but I just want a phone.

      reply to this | link to this | view in chronology ]

  • identicon
    Trouble Maker, 30 Oct 2006 @ 1:21pm

    two cents worth

    "Using hydrogen to power a car is insanely stupid. Not only is it horrifically expensive, it's not even 'green'" I don’t think you understand the concept.

    That is the point of a Hydrogen Generator, it separates the molecules of water, H2O, using the Hydrogen to burn and releasing the Oxygen into the atmosphere. You would have an Electric car that has the Hydrogen Generator that would be used to charge the batteries and in most long distance operations, be the direct power source for the drive motors.

    Running low on fuel? Pull over and fill your tank with water.

    BTW, this is the same technology that NASA uses on the Shuttle to power the electronics and re-supply the crew with Oxygen, and MIT has had a car running on this same technology for about ten years.

    Now if I can just get one of them to run my cell phone I could get the battery to last more then 90 minutes of talking.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 30 Oct 2006 @ 1:27pm

    If customers want lower prices, the mobile carriers will have to lower their costs or lose market share. Wait till one of them has the cojones to offer unlimited VOIP. Also, unlimited messaging and data would really open up the mobile market and create new opportunities for carriers (advertising, mobile transactions, streaming)

    reply to this | link to this | view in chronology ]

  • identicon
    christopmaher, 30 Oct 2006 @ 3:19pm

    tired

    honestly I am tired with the people who complain about all of the "extra/unnecessary" features on their phones.

    maybe you guys should try using them, you can find a lot of them useful if you open your mind.

    if you take a little extra time when getting your new phone to learn all of its capabilities, you may realize that it's pretty handy.

    reply to this | link to this | view in chronology ]

  • identicon
    tokjdm, 30 Oct 2006 @ 7:02pm

    In fact in the first six days since number portability became available, 80,000 users switched to au (100,000 non-au users switched to au and 20,000 au users switched to other carriers) with approximately 60,000 coming from ntt docomo and 20,000 from softbank.
    Softbank is trying to repeat their adsl strategy where they aggressively competed on price to gain market share. The strategy was apparently successful since Softbank says that its adsl business is now profitable. The strategy may be more difficult to apply to mobile phones due to the complexity of the pricing plans and services offered by each carrier.
    Number portability is also not very attractive in Japan since the internet e-mail address available on all Japanese mobile phones cannot be transferred to the new carrier. E-mail usage (not sms) is often more important than phone usage with Japanese mobile phone.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 31 Oct 2006 @ 3:36am

    well, maybe im an exception to the rule but i'm quite happy paying a little over the odds for my tariff here in the UK in exchange for the fact that i know i get a phone that is unlocked and available to do whatever i want with.

    Its called customer service - its all very well another company offering me infinite numbers of minutes at dirt cheap prices which works out to cost me a little more per month but giving me a LOT more "free" stuff but when i know i dont need the extra talk time and would have to put up with a phone thats locked to one network and restricts what i can do with it (only access "approved" internet sites for a start) i dont want anything to do with it! The woman in the shop refused to be able to understand my logic but i dont mind paying extra for good service.

    reply to this | link to this | view in chronology ]


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