Mobile Tech

Wireless Technology: Worlds Apart

The Asian cellular phone market is something of a paradox. Countries such as Japan and South Korea have invested the equivalent of billions of dollars to develop sophisticated, high-bandwidth wireless services, such as mobile video and mobile commerce technologies. One reason for doing this was so they could lead the world in deployment of such services; however, other countries have been slow to follow that lead.

In terms of sophisticated cellular data services, Japan and South Korea are well ahead of their European and North American counterparts. “When the Internet first evolved in the late 1990s, it was largely English-based,” noted Neil Strother, an analyst with Forrester Research. “In Japan and Korea, mobile alternatives emerged, and these countries have remained ahead of the pack since then.”

In those countries, consumers rely heavily on their handsets. “In Japan and Korea, the cell phone functions like a laptop,” Bill Hughes, principal analyst at In-Stat, told TechNewsWorld. Users surf the Internet, purchase goods and watch TV on their handsets.

Not as Popular Abroad

While mobile video and mobile commerce services have caught on in those countries, they have not been as popular elsewhere. Mobile commerce has started to take significant root in only a few European countries, and rich mobile television offerings remain a future rather than current capability in most areas.

The disconnect between Asia and the rest of the world is not because carriers have not been tried to introduce such services to consumers. “A few years ago, AT&T partnered with (Japan’s) NTT DoCoMo to bring its mobile services to the U.S. market, but that venture never gathered much momentum,” Forrester’s Strother told TechNewsWorld.

So, the question becomes: Why is there such a significant difference between these areas? Cultural components play a role. “Certain technologies have simply appealed to Japanese users more than U.S. consumers,” said Hughes. “Consumers were using debit cards much earlier there than they were here.” The idea of watching video on small devices has caught on more quickly there than elsewhere.

Keep It Simple, Stupid

In addition, consumer desires are different. “In South Korea and Japan, complexity is valued, so there are often multiple steps involved in order to complete transactions on their networks,” Carolina Milanesi, a research director at Gartner, told TechNewsWorld. “In Europe and North America, efficiency is the focus: Users want to do things as quickly and with as little work as possible.”

Another major difference is the size and structure of carrier networks in these countries. “The carrier market is much more homogenous in Japan and Korea than it is in the U.S. and Europe,” said Gartner’s Milanesi. In those countries, there are fewer carriers, their territories are smaller, and the relationships between carriers and third parties are more homogenous. Consequently, it has been easier to deploy new services, such as mobile commerce, there than in other countries.

The Stagnant Middle

One reason why Japan and South Korea jumped into the wireless market was to help their domestic equipment vendors gain a head start on competitors. That goal has garnered mixed results. South Korean suppliers Samsung and LG Electronics have fared well, earning top-five market positions. Japanese suppliers have not been as fortunate, as only the joint Sony-Ericsson initiative has emerged as a dominant market player.

Device makers everywhere, however, are preparing for lean times. The recent economic downturn slowed cell phone market growth. Gartner expects worldwide cell phone revenue to drop into single digits this year and be flat in 2009 — the market has enjoyed healthy growth since 2001, its last annual dip.

The current slump may not hit Korean manufactures as severely due to their market positions. Revenue growth is evident at the bottom (ultra low-cost phones, less than $25) and top of the market (smartphones). Much of the growth at the bottom is occurring in emerging markets, such as China, India and Pakistan. Here, many consumers in these places have not been able to afford the prices that cell phones commanded. LG Electronics and Samsung have fared well in this segment because they have done a good job of delivering low-cost, highly functional systems.

While the Asian companies have been at the forefront of low end systems, U.S. companies have in many ways been leading smartphone technical innovations. “The big technical advance this year was the touchscreen; everyone has been adding one,” Forrester’s Strother said.

Apple was not the first manufacturer to deliver such a device, but it was the first to popularize it. “Apple did an outstanding job in packaging its phone and making it very easy for consumers to use,” said In-Stat’s Hughes.

Driving Smartphone Developments

Google has also had a dramatic impact on smartphone features. The company has forced suppliers to change their development outlook. Traditionally, cell phone vendors concentrated on delivering proprietary systems with closed operating systems. Now, a movement has begun toward an open source model.

The current focus is on applications. Vendors are trying to develop ecosystems that will spawn new applications and drive more cellular network usage. Chances are that these applications will come from the U.S. “Lead by companies such as Yahoo and Google the U.S. has done well in developing applications that consumers find compelling,” concluded Gartner’s Milanesi. “I would expect that trend to continue as the cell phone market matures.”

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

How confident are you in the reliability of AI-powered search results?
Loading ... Loading ...

Technewsworld Channels