Wireless Informatics Blog

I’m currently working on a story for the next issue of WIF Magazine looking at the grey market for handsets and what, if any, damage it does to mobile operator business models.

It’s been an interesting exercise. It seems that while the demand for low-cost grey market handsets has declined, it’s increasingly being fuelled by a demand for higher-end, aspirational devices.

I wanted to share the bones of my piece below / this is very much work in progress!

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Just a week after its official launch in the United States, where it was locked to the T-Mobile network, it was reported that the Android-powered G1 handset was appearing for sale on the streets of Beijing.

Despite a hefty US$580 price tag, and the necessity for Chinese owners to contact T-Mobile US for an unlock code, the appearance of the handset some 6000 miles away from ‘home’ shouldn’t come as too much of a surprise.

Like the iPhone before it, the G1’s rapid appearance outside of official distribution channels, demonstrates the high-end of the grey-market for mobile phones and accessories. This isn’t a grey market driven exclusively by price sensitivities, but by desirability. Indeed it is now estimated that over one million iPhones have been unlocked and sold through unofficial channels.

The market for such devices typically doesn’t take long to develop. Even in the case of the iPhone, whose distribution is religiously maintained by Apple and its chosen network partners, it was only a matter of weeks before the device began appearing in the electronics districts of Beijing and other major Asian cities. Most other devices, primarily from major manufacturers such as Nokia, are readily available through no-name distribution companies who often ship containers of product into countries under the radar of local customs and import tax officials.

Of course the problem isn’t limited to high-end, aspirational devices, nor is it new. The ‘public-face’ of the grey market handset industry can still be found in highstreets and markets across many Asian and African countries.

India is where many observers look to when assessing the grey market. At it’s grey-market peak in 2001, it was estimated that 89% of all mobile handsets in circulation where purchased outside of official channels. A steady supply of handsets, many refurbished models from South East Asia and the Middle East and many smuggled into the country, helped to meet demand and allowed handsets to be sold for between 20-40% less than their ‘official’ counterparts. Higher-end handsets saw price differences of up to 70%. It was a problem that cost the Indian government many millions of dollars in lost revenue and delayed the entry of handset manufacturers entering the market with official aftersales programs.

Nationally, several million handsets are still sold through the grey-market each year; many are high-end devices sourced from Europe and not yet available in the country, others are smuggled in from tax-free Dubai.

Most of the major handset manufacturers have, in the last few years, launched dedicated programs to introduce low-cost handsets into emerging markets. The availability of cheap(er) handsets from the manufacturers, a growing number of official retail outlets in geographically dispersed regions and lowered import taxes means that in many cases its now not worth sourcing a low-end device on the grey market. To adapt, the grey market has geared itself around feature-phones and higher end devices that may not be available locally.

Many European dealers now view Asia and Africa as a convenient dumping ground for unsold stock. Highly subsidized and frequently replaced, the European handset is cheap and prevalent. Dealers constantly battle to manage their stock and anticipate consumer demand. Outdated models (in reality less than 12 months old) frequently find their way onto the grey market.

The grey market for handsets has evolved. We no longer see market shares of 90% largely thanks to the evolution of low-cost components and import taxes being managed to lower the price disparity between the official and unofficial channels. Instead, focus is shifting to the aspirational characteristics of the handset and the desire for consumers to acquire high-end devices at a lower price point or even devices that are not even officially available in their home countries. Such factors have even brought the grey-market to North America and Europe. And while the penetration of these handsets has declined, their user base now includes early adopters and power users; all of which are socially influential, revenue generating and networked. To ignore them seems a lost opportunity indeed.

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The article is still work in progress, and I’m currently researching what, if any, damage the grey market does to mobile operators. All things going to plan, the next issue of the magazine will be available in January.

      

I spend a fair amount of time playing around with new mobile application. Most of the  time it’s purely research-based, assessing the user experience of sign-up, download and usage. However, once in a while I’ll try out a new service because I actually want it.

One of these is Zyb, a mobile social networking and contact management tool. My primary interest was the ability to back-up my phone book (+500 contacts) to the Zyb web server, manage contacts, edit etc and sync up to my handset on-the-fly. Even better, if I ever lose my phone, upgrade, change provider etc then Zyb will manage the synchronization of my contacts to that new device.

Now, if you are a mobile content or service provider you really need to check out the Zyb sign-up and installation process because it’s possibly the slickest I’ve seen. If ever there was a benchmark for usability then this is it.

The entire process took me less than 3 minutes using a Nokia E61i running S60. After entering a username / password / phone number and email address online, you follow a simple wizard, selecting your phone from a graphical list of devices and network. Within 60 seconds my phone had received a configuration message (containing the SyncML settings). It instructed me how to save the configuration and the on-screen wizard guided me to a new ‘zyb’ entry on my phone’s sync menu. One more click on the entry and that was it - the Zyb screen on my PC jumped to life and I watched that most valuable of phone asset (contacts) sync up to an easy-to-use web interface that lets me edit, delete, share contacts etc.

• Information capture was kept to a minimum (just the essentials)
• Graphical representation of devices helped me to find my device quickly and accurately
• On-screen wizard and on-device instructions were in perfect sync.
• Configuration message sent to my phone included instructions on how to save the setting.
• I was kept informed of progress at all times. Never was I left wondering what was happening. If my phone was syncing, the information and progress was clearly displayed on both device and PC.

All in all, its was a refreshing change. A third party mobile app that worked without bother or confusion and delivered a compelling service to boot.

WIF membership Zyb?!

      

www.wdsglobal.com/android08/G1

Availability dried-up even before the phone had hit US shelves last week, now it’s the   UK’s turn as the T-Mobile G1 comes to the UK on the 30th October. If you were one of the lucky ones able to pre-order your phone you only have a few days left to wait. If you can’t wait, or you weren’t able to pre-order, then we may have the solution.

WDSGlobal is offering free access to a G1 virtual simulator. This let you explore the phone from the comfort of your PC, check-out its features, explore the menus and even learn how to set-up and use services such as email, Android Market and Google Maps.

Even after you get the real thing in your hands, you can use our simulator to help you configure data services and troubleshoot common issues.

The G1 simulator is only available until 24th November. You can access it by visiting www.wdsglobal.com/android08/G1

      

They are becoming ever more sophisticated, yet the average mobile phone remains largely unexplored says a new study by WIF member WDSGlobal, a specialist in support and device management services for the wireless industry.

A survey of 500 mobile users revealed that only 20% of a phone’s services and features are used regularly and up to a quarter remain completely undiscovered.

“For the most part, users struggled to list more than half a dozen services featured on their current mobile phone. Regular usage was largely confined to voice, text messaging, address book, camera and alarm clock. Users do dip into additional services, such as the music player, Internet and games, but we found that a large proportion of features remained completely undiscovered,” says Doug Overton, vice president of consulting and analysis at WDSGlobal.

Service discovery, the company suggests, is now one of the most challenging barriers to mobile service adoption.

“Many mobile phones offer dozens of features and preinstalled applications. It’s often the case that users feel overwhelmed,” explains Overton. “Poor user interfaces and complex menu structures mean that many revenue generating services are buried several layers deep and are unlikely to be discovered. Conversely, users who know what they want often struggle to find the relevant application or service and simply give up.”

The survey was conducted in support of WDSGlobal’s vDevice offer, virtual handset simulators that allow end-users to quickly explore handset capabilities, compare features and discover new services. Using simple-to-use tutorials, vDevice simulators are also one of the most effective ways of helping end-users to set-up services such as mobile email and Internet browsing.

“Mobile operators and handset manufacturers around the world typically apply our vDevice simulators to their web-based self care portals. They fully immerse the end-user and introduce them to new features and benefits far more effectively than traditional paper-based manuals. Simulators are also hugely beneficial within customer care operations where they typically reduce average call duration for complex service set-up or synchronization issues by up to 50%,” finishes Overton.

WDSGlobal is offering free access to vDevices samples at www.wdsglobal.com/vdevice

Six handsets are available (Nokia E61i, HTC Touch, Sony Ericsson, Nokia 6110 Navigator, HP iPAQ rw6800, Toshiba Portege G900), featuring a range of virtual tours, tips and tricks and tutorials, including multimedia messaging, web browser configuration and mobile email set-up.