3G: 3G of Communication

It is expected that in the first couple of years of 3G rollout in India, the 3G services are slated to be mainly adopted by corporates, professionals and the affluent population in top cities and towns pervading to the next strata. The Indian consumer is extremely price-sensitive. The success of 2G services has proved this point beyond any doubt that only really affordable tariffs and handsets providing real value for money, can help 3G technology achieve mass success. The price point will be cleared only when the services are rolled out. The cost of entry-level 3G handsets in the range of $250 is still perceived to be high. This phenomenon could cause a serious hindrance for rapid penetration of 3G.

'In the year 2007, we will see PC applications moving on to the mobile'
-Dee Dutta, CVP and head, Marketing, Sony Ericsson

Dee Dutta joined Sony Ericsson in June 2002. As the global head of marketing, he has been instrumental in redefining the Sony Ericsson brand as one of the most dynamic and innovative mobile handset brand. Under his leadership of marketing, Sony Ericsson has established itself as an iconic and differentiated brand in the minds of consumers across the world

How was the year 2006 for Sony Ericsson and what were the focus areas?
The year 2006 was a great year for Sony Ericsson. Our third quarter results were outstanding because we achieved two major achievements; firstly we achieved the highest global growth in handsets in terms of volume, and secondly we achieved perfect figures.

We built up on the Walkman phone, which we introduced in 2005. And, we have launched high memory phones, which has been a great success. Another area of focus was imaging, and we have launched phones with unique imaging solutions.

What were the trends established in mobile communication segment in 2006, and what trends do you expect in 2007?
Music on the mobile phone became popular in this year. The other area gaining popularity is web. The whole area of transferring data over devices has been the main focus this year. In markets like India, we will see a segmentation between the needs of the urban consumer-who wants a lot more sophisticated services, and the rural consumer-who is more focused on voice and messaging.

Year 2007 is expected to be the year of mobile Internet. We will also see the launch of HSDPA devices. The big challenge is not only to launch this technology but also to make it easy to use for the consumers. Intuitive menu systems are going to be the key, as it would help people to navigate the menu system. In the year 2007, we will see the applications of the PC moving to the mobile.

What lies in the future for multimedia phones?
Multimedia phones or convergent media phones are going to be big agenda item all over the world. Particularly the Indian consumer who wants a lot of entertainment and sports content multimedia phones are going to lap it up. The resolution of handsets, quality of content, battery backup will become very relevant.

Sony Ericsson phones became remarkably popular in 2006. How do you plan to build on this in your strategy for the year 2007?
We are going to build upon the brand identity that we launched and we are going to keep driving the music mobile phone. Mobile Internet and mobile WAP are going to be the new areas for us, and we are going to launch phones with mobile Internet capability, particularly moving around content between various devices over the Internet. In India it depends on the 3G introduction, but we will make sure that our handsets will not be outdated when they are launched. We are one of the top three brands and we expect higher growth because Sony is known in the music segment. Our strategy is to make it easy for the people to transfer music by using open source software. Sony Ericsson phones come in packages suited for each segment of the consumer from 15-year-old to a real music buff. Our strategy is to keep the customer excited about our products, and we plan to bring in new models very frequently.

Are you planning to open exclusive Sony Ericsson stores? What will be your strategy for 3G phones?
By the end of 2007, we are going to have 100 Sony Ericsson experience stores. We are also planning to establish shop in shops to improve our presence. So we are going to have a combination of retail stores, shop in shops and the multi branded stores. 3G is very key to operator roll out. So we will sell through the operator as well.

The theme of your phones in 2006 has been lifestyle, music phones and imaging? Will you carry on the same for 3G phones too?
Most of our phones are 3G enabled, and we will continue to launch more and more of them. We have launched the new identity, and the next thing is to localize it and give it an Indian flavor. For this we have taken steps in the areas of movies, sports and entertainment.

Killer Applications
World over, the 3G market needs a killer application to really get into the groove. To realize the full potential of 3G networks and handsets we require applications beyond ring tones and wallpapers. Ramdev Sharma, CTMO, Huawei India says, "It is challenging to identify a single killer application for 3G phones. It will be game of business models and packaging of host of multimedia services to provide an enriching customer service experience." 3G will basically be driven by the need for high-speed broadband data connectivity. It essentially, brings the world of the Internet to a mobile phone with the addition of enhanced messaging and multimedia functions.

3G PHONES: WHAT CUSTOMERS WANT?

Source: Mobile Users' Satisfaction Survey 2006

3G phones promise to offer a wide array of services such as music, ring-tone downloads, video streaming, video calling, video message bank, video ring tunes, multimedia (MMS) and picture messaging, mobile TV, Internet browsing, gaming, mobile commerce transactions etc as has been experienced globally. High speed Internet access, entertainment, e-Governance applications, m-commerce, e-healthcare and e-learning are expected to be the right services for India.

On the other hand HS Bhatia, business group head, GSM Phones, LGEIL believes that the killer application would be live-video calling for video-conferences and live video streaming for TV Channels. "These two applications would popularize 3G. Also, value added applications like stock market update and real time commodity market update would help the business sector," he says.

The possibilities are limitless, but the most important aspect here would be the cost of applications and whether compatible handsets are available at an affordable price. The Indian consumer can be divided into two segments: the urban-who would go for high-end services such as mobile TV, Internet, streaming and other data services; and the rural-who would still stick to the basic voice services and may eventually opt for mobile broadband services at a community level.

Bottlenecks
The country is brimming with anticipation for 3G, but there are a number of roadblocks and issues that need to be addressed before 3G becomes a reality.

HS Bhatia, business group head, GSM Phones, LG EIL says, "3G in India is facing issues related to government and spectrum. But once these are cleared there is no stopping. There is a myth that the services would not be affordable but LG believes it is not so. Especially with favorable telecom policies from the government and the increasing buying power of Indian consumers, sky is the limit. It is just a matter of time when the services are launched."

Key reasons for faster 3G adoptions in India

Technological maturity: Early deployments were at the bleeding edge and encountered tremendous technical difficulties. Infrastructure and handset vendors have resolved most of those issues.
Lower cost: Greater economies of scale mean 3G component costs will be drastically reduced further, allowing more aggressive roll out.
Capacity constraints: Congested 2G frequencies in urban areas will cause operators to aggressively pursue high-end user migration to 3G

Ramdev Sharma of Huawei India says, "3G licensing is yet to happen in India. Therefore, there is a lot of unpredictablity on this front. The regulatory aspects of 3G spectrum allocation will have critical and long lasting ramifications in making the service an affordable proposition."

What Lies Beyond
3G is yet to be launched in India. HS Bhatia of LG EIL says, "Even if we assume that 2% of the 150 mn subscribers start using 3G services, then in the initial go itself India will have 3 mn 3G subscribers. This clearly shows what potential India holds for any new technology that is launched in the near future." Based on certain research estimates, it is believed that 3G penetration would be of the order of about 7% of all mobile subscribers by 2010, assuming that the government of India expedites 3G licensing so it can be launched by end of fiscal 2007.

Determinant would be the kind of services offered by operators. India as a market is quick in adopting new technologies. With rise in disposable income and demand for faster multimedia and Internet application, the technology will be caught on soon. It is certain that 3G phones are destined to become the most popular and valued ICT tool that an individual would possess.

Soon 3G devices would have increased processing and computing capability to deliver multimedia voice, data and video services in one platform

Ramdev Sharma added, "The 3G devices would become more and more intelligent and mobile as time progresses. They would have increased processing and computing capability to deliver multimedia voice, data and video services in one platform and also would become network agnostic to provide any service, any time, any where, in any environment."

Globally, the societies are transforming to become ICT enabled to attain economic supremacy and improve efficiency of the governments in providing social services cost-effectively. Only the mobile phone can deliver the multimedia services to users needed to build an "ICT enabled society". But in India the question remains...When?

Sonia Sharma
sonias@cybermedia.co.in