Mobile World Congress (MWC), in Barcelona, is the annual event where the mobile telephony industry gets together to talk shop, covering products, trends, policy and business. Most of us follow along for the phone announcements, and there are always plenty of those, but behind the scenes there is a lot of serious discussion about regulation, spectrum, and services. It is, after all, a congress, not an exhibition.
Although SA lags international trends in phone sales, we're on the same path, and rapidly catching up to the more advanced markets. The trends at MWC show us the technology directions we'll be taking, and how they'll change our lives.
Smartphones dominate global sales
This year continued the smartphone trend - the new products announced were almost exclusively smartphones, and smartphone apps dominated the software scene.
MWC is very first-world focused, and smartphone usage is well over 50% in the US and Europe and still accelerating. Feature phones are being steadily phased out or relegated to niches (which smartphones are gradually eroding) such as low-cost or ruggedised devices.
Smartphones are attractive not only to consumers, but also to vendors and networks. Higher margins on devices and revenue streams from data, apps and content, all contribute to an ecosystem beyond traditional phone revenue. Some of that is coming at the expense of the networks though, with free messaging hurting SMS revenue. Skype and VOIP services are a looming spectre for networks struggling to find a smooth transition from revenue driven by voice, to revenue driven by data.
In SA, smartphones are some way behind those developed markets, but growing at a rapid pace. “Twenty-one percent of SA cellphone users use smartphones, more than double the figure a year ago,” says Arthur Goldstuck, MD of World Wide Worx.
But European trends are only meaningful for one segment of the South African market, warns Chris Ross, managing executive commercial development at Vodacom.
“In SA we live in both worlds. We have very different market segments. There's the digitised high-end user, the traditional prepaid voice user, and the aspirers somewhere between the two,” Ross says. “That is very different to a Eurocentric view. We live in both markets, and we try to bridge them with top-up plans to overcome that barrier to entry, and focus on the journey, developing customers and introducing them to value-add services like M-Pesa.”
The prepaid market, dominated by voice usage, is primarily driven by feature phones, Ross says. “On the prepaid side we focus a lot more on feature phones, especially in retail. You can get a phone for R79. You can get an entry-level smartphone for R800, but it won't have the bells and whistles.”
For now, Android is looking strong in the low-end of the smartphone space, with its partners focusing on keeping entry-level prices under $100. Nokia's strong position in SA, its relationship with Microsoft, and a push to establish Windows Phone devices (like the new Nokia Lumia 610 and ZTE Orbit) will show competition growing in the budget smartphone sector this year.
Android dominates smartphones
If Mobile World Congress is any indicator, Android is dominating smartphones just as smartphones are driving the market as a whole. The vast majority of phones announced at MWC were Android devices, with plenty of excitement around models running version 4 ('Ice Cream Sandwich') of the operating system.
Android's market share is somewhat exaggerated at MWC, though. Apple doesn't take part at the congress at all, preferring its own events for product news, and Microsoft's Windows Phone is still too early in its growth path to make much impact, so Android was always going to dominate the headlines.
Nokia, with its Microsoft tie-up, did have some impressive Windows Phone models on show, but the phone which received most attention was actually a Nokia running the declining Symbian OS - the 808 PureView.
MWC bias aside, Android is the platform to watch. At the close of 2011, Android shipments were routinely accounting for more than half of smartphones sales. iOS (powering iPhones) is still growing. The big losers consistently over the same periods were Symbian and RIM.
BlackBerry to MWC: we're still here!
In this country, RIM still dominates the smartphone segment, with BlackBerry data plans and messaging driving adoption. “BlackBerry is the leading smartphone brand by far, with more than half of that market,” Goldstuck says.
Gartner's figures back that up, but show a decline mirroring the global trend: in Q1 2011, RIM accounted for fully 75% of SA smartphone sales, slumping to 60% by Q4. In October last year, a prolonged service outage left BlackBerry users in many regions, including SA, without access to data services and drove many customers to seek alternatives.
From the show coverage (or lack of it), you might be forgiven for thinking RIM hadn't made much of a showing at MWC either. But the company was there, with plenty of products on display and promises of a new OS version later this year. But its core business is still under attack, and the company has weathered the disappointment of the PlayBook tablet, and the departure of its CEOs, on top of its diminishing market share.
RIM can also expect renewed attacks from Nokia and Microsoft, targeting enterprise users with closely integrated messaging and productivity solutions. And free messaging apps, such as WhatsApp, are becoming commonplace enough that European carriers are acknowledging it's a business concern - those apps strike at the heart of a core BlackBerry value proposition: BBM.
Don't count RIM out yet though. The company's new devices are receiving favourable reviews, and the software update for the much-criticised PlayBook may have succeeded in turning an embarrassment into a serious contender.
(Remember too that a year ago, many were predicting the decline and fall of Nokia, despite its strong presence in the feature-phone market, but its partnership with Microsoft and an armoury of promising next-generation Windows Phones is a major step forwards for the Finnish phone giant.)
RIM might be sweating the messaging trend, but operators shouldn't, says Vodacom's Ross.
“Smartphones are all about data, and data users use exponentially more: it's like a drug. You might start with WhatsApp but you're soon on to Facebook,” he says. “Although the margin per megabyte might be less than the margin per minute, the volume makes up for it.”
* Next up, in MWC Part II: Apps, tablets, and networks. Apple still owns the tablet space, and apps hold the key to success or failure for mobile platforms.
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