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Churn in the Global Cellular Handset Industry

Volume 15, Number 3 Article by Vinod K September, 2003

Event Management: Promising Horizons :Award Winning Student Essay : Churn in the Global Cellular Handset Industry – An Inflection Point? :

Between 1986 and 1995, the subscriber base of cellular telephony customers grew from 1.1 million to 55.3 million in the US and the EU. Many of the network operators raised enormous debt and equity capital and used the cash to build network capacity and buy wireless-spectrum licenses that would provide high-speed data service on their wireless networks. Now even household names like British Telecommunications and France Telecom may need to sell assets. In the current turbulence and realignment of the global telecom industry, award-winning essayist Vinod K sees signs of an imminent inflection point in the cellular handset industry.

The first part of the essay focusses on the factors influencing the growth of the industry, which flow from the technologies that go into the cellular phone. Rapid disruptive technological innovations in one of the constituent technologies can alter the equilibrium in the product market. In order to underline the impact that an inflection point in the constituent technologies can exert on the product market, Vinod analyses the battery technology using various theoretical frameworks of technological innovation and marketing. The findings suggest a modification of the existing ‘Technology S-curve framework’ and an extension of the ‘Failure framework’ proposed by Clayton M Christensen. The battery being a key component, this framework can be applied to other constituent technologies as well to help determine if the product as a whole is at an inflection point.

The first part of the essay focusses on the factors influencing the growth of the industry, which flow from the technologies that go into the cellular phone. Rapid disruptive technological innovations in one of the constituent technologies can alter the equilibrium in the product market. In order to underline the impact that an inflection point in the constituent technologies can exert on the product market, Vinod analyses the battery technology using various theoretical frameworks of technological innovation and marketing. The findings suggest a modification of the existing ‘Technology S-curve framework’ and an extension of the ‘Failure framework’ proposed by Clayton M Christensen. The battery being a key component, this framework can be applied to other constituent technologies as well to help determine if the product as a whole is at an inflection point.

Reprint No 03302