Wireless Network Operators Target High-Yield Enterprises
Clear Trend emerges, analysts say, 24 September 2001
Operators and solution providers are hoping that wireless applications will gain acceptance in the lucrative and loyal enterprise sector to help reverse the downward trend currently causing losses in the European wireless data services space.
While revenues per subscriber have fallen, tremendous opportunity exists for strong rivals to claim a larger share of the wireless data service market by harnessing the power of innovative partnerships and savvy advertising and marketing initiatives.
The prevailing apprehension in the industry - stoked by
misconceptions surrounding the technology, low awareness of its benefits and the negative connotations associated with WAP over GSM - will eventually give way to a more rational assessment of wireless solutions by businesses and, thus, stimulate uptake.
Since 2000, the slowing growth and subscriber penetration rates nearing saturation levels have created challenges for companies active in the European wireless telecoms arena in controlling market dynamics. Concerns over mounting bad debts after expensive rounds of 3G licence buying and network construction amongst telcos have further exacerbated the situation.
These problems are compounded by the increasingly fierce competition
fuelled by virtual network operators and new entrants with 3G licences.
To add to this, regulatory pressures are set to increase in several of the main European markets.
But all is not unremitting gloom, says a new study by Frost & Sullivan, the international marketing consulting company, which
expects the introduction of GPRS with its "always-on" functionality to change the face of mobile data access, especially in the enterprise sector.
Ben Donnelly, Research Analyst at Frost & Sullivan, reports: "Most network operators have shifted their strategies from the traditional
customer acquisition models towards reducing subscriber churn and increasing their focus on high value customers. As a result, many
operators concentrate on the corporate world, owing to the higher average revenue per user (ARPU) and the lower levels of churn displayed. This is underpinned by the step-change GPRS is believed to bring about, enabling a far greater range of improved quality data services.
However, the study warns that operators need to radically expand their skills set by forging partnerships with enterprise software
companies such as Microsoft, Oracle, Siebel and SAP. However, "at the same time, these large enterprise software companies are looking to move into wireless and increase their own revenue, but they face
competition from the wireless-specific solution providers" the
author adds.
The quest for effective mobile workforce solutions will aid deployment in the enterprise, with the number of subscribers in the European enterprise sector expected to rise from just over 21 million
in 2000 to 33.9 million subscribers in 2006.
Meanwhile, enterprise
data revenues are expected to rise tenfold from around $700 million to over $7 billion during the same timeframe.
In terms of volume of users, the most significant opportunities are offered by horizontal applications such as email and PIM (Personal Information Management), sales force automation and field service management.
"The enterprise market requires more complex data applications andservices than network operators are used to dealing with, which necessitates collaboration with the enterprise solution developer community" Donnelly explains. "Yet, due to their lack of skill in addressing enterprise data solution requirements, the operators are at risk of losing control in the value chain and becoming pure carriers, so selecting the right partnerships is critical for
success."
It is not always the case that the existing software heavyweights are the most suitable partners. Donnelly points out: "The wireless-specific solution providers have to their advantage a more intimate understanding of the particular market that they cater for, flexibility in their service portfolios, and relatively strong wireless expertise in developing solutions for wireless environments from the concept stage. However, they need to develop brand awareness and system integration skills if they are to succeed."
The existing IT solution providers possess only minimal experience in
the wireless arena and have been relatively late in bringing wireless solutions to market. Hence, they can benefit from partnering with key wireless players. In addition, acquisition
opportunities could become
available among the wireless-specific solution vendor community.
In its review of the competitive environment, Frost & Sullivan's study confirms that Palm's current dominance is set to be eroded by Microsoft's Windows CE.
Windows CE's core advantages lie in its
greater processing power, memory and functionality, however, the familiarity of Microsoft's applications will be a key driver.
Research In Motion's Blackberry is expected to gain significant share and enjoy increased kudos in the European enterprise market.
www.frost.com
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