Volume 15, Number 1 Article by Hemant K Sabat March, 2003
Delivering Mobile Wireless Value Through the Evolving Value Chain :
A series of technological leaps in mobile wireless devices, networks, business models, and applications is setting the stage for mobile wireless to transform itself from mobile voice to the ultimate communication medium. However, to capitalise on the opportunity the stakeholders have to understand the value propositions, the evolving value chain and the market structure of the mobile wireless industry. Hemant K Sabat studies these fundamental drivers of the mobile wireless industry and maps the road ahead.
Today’s subscribers are looking for convenience, that is, ‘mobility’, ‘reachability’, ‘always-on’, ‘anytime, anywhere’ Internet access, and personalised, secure and cost effective service. In delivering these value propositions, traditionally, the mobile wireless network operator has managed and owned the entire value chain, performing both the wholesale network operation and retail service provision functions.
In the present scenario, new drivers are driving the evolution of the mobile wireless value chain, encouraging partnerships and M&As, and the industry has been evolving architecturally. Players are more readily identifiable into two new broad segments: content-related services and applications, and network infrastructure and access devices. The industry will see a true confluence of wireless and Internet as wireless networks migrate to the wireless Internet packet-based network. To meet the consumer demand, the market will see a spate of products that will increasingly include new functionalities offering data services, mobile telephony and media and entertainment, all integrated into the same device.
Despite the opportunities ahead, H Sabat cautions that parts of the architecture have yet to be implemented. Security concerns are paramount. Further, the degree to which the industry is successful in creating ubiquitous interoperability among the different protocols and standards in the network will determine the fate of the industry. The network infrastructure and the markets are saturated with established players. The industry has turned hostile and growth has slowed.
The viable strategies for players today are — to grow faster than the market by acquiring market share through expansion or aggressive pricing and differentiation, divesting non-core assets to generate higher operating profits, merging and acquiring units to derive synergy; and to drive scale and scope economies in the value chain.
Reprint No 03105
