Déjà vu with data growth

We have been here before. Data traffic already exceeds voice on many mobile networks. And it is predicted to increase 1000-fold within a decade as wireless becomes the world’s primary method of Internet access. A massive surge in fixed network traffic started approximately 15 years ago. Data surpassed and then dwarfed voice as Internet access and IP services drove exponential growth.

Major fiber investments around the millennium provided copious amounts of cheap bandwidth for consumers. Unfortunately, overinvestment followed by bankruptcies and significant retrenchment proved to be a painful experience for many network service providers, their vendor-financed suppliers and other investors. The question is: Will these mistakes be repeated in the bonanza to turn 3 billion mobile voice and text users into mobile broadband consumers on Long Term Evolution (LTE) and 4G networks?

Mobile broadband economics

To help ensure profitable growth, mobile operators are revamping their business models. This will include charging on the basis of speeds, data volumes, service levels and advanced services which can be combined with the raw connectivity.

In the fixed telecoms boom of the 1990s, aggressive pricing on highly commoditized connectivity services and vendor financing exposed many operators and their suppliers to significant losses. Today, operators and technology vendors must be careful to ensure services are more differentiated and expenditures are better matched to their revenues.

Some players triumphed through the fixed Internet access revolution. These included incumbent local phone companies, leading DSL equipment suppliers, and many web companies including Amazon.com and Google. But there were also significant financial casualties such as some national backbone and international communications service providers, fiber optic transmission equipment manufacturers and many ISPs. The challenge will be to figure out which strategies will be required to capitalize upon the mobile broadband revolution while avoiding previous mistakes.

Old and new challenges

The old 3G problem was that nobody used it much. At first, flat-rate unlimited data pricing made great sense in developed nations where a sizable segment of price-insensitive users were encouraged to use it while providing them comfort that the monthly expenditure was fixed. The arrangement was also simple for operators with no need for metering or complex billing and no shortage of network capacity. That all changed a few years ago when users – of smartphones as well as data cards and dongles – started using 3G networks a lot.

The relatively new 3G problem and the upcoming 4G challenge is that escalating demand must be economically balanced with supply. This is a multi-faceted puzzle that must use pricing to temper demand and associated network costs. It’s closing time for the one-size-fits-all, all-you-can-eat pricing model because it:

• Fails to extract higher expenditures from those who are willing to pay more
• Excludes price-sensitive users who would be willing to pay lower prices for limited usage or reduced performance
• Subjects operators to extremely high usage and at great cost from a small proportion of customers

Figure 1 illustrates how a single flat rate limits revenues by restricting pricing opportunities with those people who are willing to pay more and restricts subscriber uptake with those who are only willing to pay less.

Figure 1: Flat-rate pricing limits revenues and restricts subscriber uptake

The desire to boost revenues while limiting total costs has made flat-rate pricing with unlimited usage unworkable in mobile except on new networks with excess capacity where the lure of this pricing model can accelerate subscriber acquisition. Unfortunately, speeds on parts of these networks soon plummet due to congestion. Operators carry a heavy burden increasing mobile broadband capacity because costs with spectrum, radio access, backhaul, and core network technologies are significantly higher per gigabyte transported than on fixed networks with fiber and copper access lines.

Furthermore, the vast majority of mobile subscribers worldwide have prepaid, pay-as-you-go pricing for voice and text. With so many of these users in cash-based economies and without operator billing relationships or credit ratings, they will also be best suited and most amenable to prepaid and usage-based arrangements for data.

New mobile business models from many operators worldwide include tiered service pricing on the basis of access speeds, volumes of data and session lengths with prepaid and postpaid charging. Operators are also seeking to enrich services with improved quality of service (QoS), quality of experience (QoE), location-based capabilities and more.

Footing the bill

Bringing broadband IP and Internet access to the world’s masses is a very costly undertaking no matter which technology is used. Wireless broadband upgrades from 2G to 3G or 4G are highly suited to places where there are no landlines including some remote regions in developed nations.

Europe’s millennial 3G licensing also caused an economic shock to the telecoms sector that should not be repeated. Taxing mobile operators with high spectrum costs in conventional auctions extracts excessive capital from the sector and impairs investment for the most expensive to reach places and those consumers who have the least to spend.

The legacy of the over investment and excessively competitive pricing in long-haul, fiber-based communications capacity a decade ago is that some assets were able to be purchased after the bust for a small percentage of original costs. In conjunction with copper landlines funded by preceding decades of monopoly profits, this has provided affordable broadband Internet access to those who happen to live in the right places, but what about everybody else?

Mobile broadband infrastructure is very costly, though not as expensive as pulling fiber to rural and remote communities everywhere. The danger is that mobile network expansion will be curtailed if spectrum is taxed too highly in auction fees. Licensing with more significant coverage and service level obligations in conjunction with less costly spectrum would extend coverage and capacity investment much further.

Bridging the digital divide

Existing fixed broadband Internet users who have mobile lifestyles are the most obvious early adopters for mobile broadband on phones, laptop PCs and other devices. However, their demands could ultimately be exceeded by the billions who today have limited or no Internet access and to whom fixed Internet access with fiber or copper connections are not economical. Mobile broadband is always on and always with you – a weekly commute to an Internet café or a library visit is a far cry from the pervasive Internet experience provided with personal mobile devices. For these people, mobile broadband will become the predominant or only means of Internet access.

Compared to wireline, wireless remains the most economical option for voice and Internet access outside of densely populated areas and for approximately half of the world’s population. Over the last 15 years the Internet was brought to many who already had landline phones, by first using dial-up and then through DSL over existing copper access lines connected to newly built fiber-optic backbones. Meanwhile, remote regions and developing nations were catching up on voice services with 2G cellular-based access.

Cellular devices are now also more accessible and most suitable for the mobile lifestyles and literacy levels of many who spend most of their time outside of a home or office. Looking ahead, LTE will bridge the digital divide. Wireless networks will migrate to 3G and 4G including next-generation IP technologies and will bring mobile broadband Internet to billions of people who have cellphones but no fixed access.

Today only 59% of the world’s population uses mobile phones. That means nearly 3 billion people are excluded from the mobile economy. This number is far too large to be a problem; it has to be an opportunity.

A 10% increase in mobile penetration leads to a 1% increase in low to medium income GDP. That means if we put mobile phones in people’s hands, we have an opportunity to add approximately US$160 billion to the global economy. But is that it, or can we add more?

According to a model developed by Bell Labs and the World Economic Forum, with the right combination of actions and investment, we can accelerate the impact of mobility by as much as 36%, measured in GDP.

The model predicts how mobile policies, applications, technology, and economics can impact the future. The team found that while mobile broadband is a good thing for economic and social growth when we combine it with the right applications it gets even better.

Driving adoption

Mobile networks provide access to people, markets and services. They provide a means to connect more people to the growing digital economy. This is especially important to developing countries and rural areas.

Developing countries now comprise 86% of the world’s population, and over half the people in those nations are living in rural environments. Mobile access in these areas is still far behind adoption in developed regions.

People in emerging markets are only half as likely to have access to mobile communications as the residents of developed countries. And fewer than 10% have Internet access, far below the global average of 23%.

If we can provide more people with mobile access, we can grow economies and improve lives. Numerous studies have demonstrated the impact of mobile penetration on GDP growth.

Brought down to an individual level, GDP per capita is an indicator of standard of living. GDP is used along with data on life expectancy and education to calculate Human Development Index scores. Mobility affects GDP and can be a tool to drive social benefits such as education and healthcare into underserved areas.

But accessibility can be a challenge because the economics for serving rural and low-income populations are tough. As a result more countries such as – Australia, Singapore, Malaysia, Mexico and New Zealand – are starting to drive digital economy agendas. These initiatives call for substantial investments in infrastructure. Like any investor, nations want to maximize their return.

According to the World Economic Forum and Bell Labs, 3 main factors will drive the largest returns.

1. Rethinking infrastructure. With current traffic and technology adoption patterns, our team predicts many urban networks will soon be overloaded. Conversely, many rural areas are underserved. Mobile access today is not ubiquitous. To achieve ubiquity quickly, we need to look at new business and green technology models that lower costs and accelerate universality.
2. Scaling relevant applications. We need broad deployment for certain mobile applications. One of the most telling aspects of the study is how applications can accelerate economic and social growth. We’ve seen it in Kenya with mobile payments. These sorts of applications have real social benefits and we need to find ways to scale them more quickly. The issue here is not one of innovation – it’s about broad deployment.
3. Developing a near-zero cost mobile device and services that are less than 5% of income. This is not new. If we want to extend mobile services to lower income communities we need to address this. Our model shows pricing has a major impact on mobile related growth. Tackling this target may seem like an impossible task, but we need to set the bar.

Revisiting infrastructure investments

The economics of traditional business models are being challenged. Organizations and governments that want to drive economic growth will need to rethink their approach to infrastructure. They will need to be creative to grow capacity and extend reach.

In rural areas, coverage will be the major concern. Developing a business model that supports cost-effective mobile service delivery will require innovative thinking and a partner ecosystem. Some rural settings do not have access to electricity, but we no longer need to choose between delivering electricity or communications infrastructure. With new alternative energy solutions, electricity and mobile can now arrive hand in hand.

In urban areas, providers will deal with staggering traffic demands. Bell Labs predicts the average number of devices per square kilometer will grow from 400 in 2011, to 12,800 in 2015. That increase in the number of users will generate a more than 30-fold increase in traffic. Scalability will be critical to ensure that networks can respond to the load and provide coverage to meet the growth.

Applications must be relevant and scalable

Countries that want to maximize growth should encourage mobile applications that support basic human needs. The more relevant the application, the more incentive people have to adopt the technology. One of the most interesting findings from the study was that not just one, but rather a suite of applications can drive growth much faster than select single applications (Figure 1). Research substantiates that technology adoption happens at a much faster rate when applications are bundled together and appeal to a large portion of the population. Education, healthcare and banking applications are important examples, but they must be simple and locally relevant. Additionally, mobile applications that target the specific needs of women in developing countries will help bridge the gender gap and address this underserved market.

Figure 1: Mobile adoption accelerates when applications are bundled and have mass appeal

Affordability is key

The higher earning segment of the population isn’t the focus here. For ubiquitous access to become a reality, affordability at the lower income level must be addressed. In developing markets, device costs combined with a monthly service charge can be a huge barrier for many. Accelerating the adoption of mobile broadband to make communication services available to all socio-economic levels means they must be affordable. When the price of the mobile solution falls below 5% of the household expenses, mobile adoption becomes much more realistic (Figure 2). However, there are a number of factors that need to come together to make this happen:

• Technology vendors need to develop innovative network architectures requiring very low capital and operating expenses
• Device manufacturers and content providers must develop extremely low-cost, simple interface devices with Lighthouse applications to drive uptake
• Operators must work together with public and private sector organizations to create low-cost services for low-income households
• Government agencies need to implement tax incentives and policies that will drive economic growth

Figure 2: Affordability is key to mobile adoption

The reality is, without a strategy that will put broadband within the reach of the low-income population, no policy will work – even for countries with a mobile broadband agenda. All of the players identified above must participate to create a feasible ecosystem to drive adoption.

A common goal for the common good

Countries that develop a mobile broadband strategy can optimize growth. But they need the right combination of infrastructure, applications and economics. According to our model, countries can drive GDP growth as much as 36% higher than an access-only approach. Simply put, when people have infrastructure and applications at an affordable price, mobile use will grow along with a country’s digital economy and its people.

E-mail is out, social networking is in, and all the advertising in the world can't topple Google, according to the ComScore 2010 U.S. Digital Year in Review.

The report, which was released on Monday, provides a snapshot of usage trends across the digital space. Perhaps most noteworthy was the shift in e-mail usage, particularly among young people. Total Web-based e-mail use was down eight percent last year, led by a walloping 59 percent drop among 12 to 17 year olds. The second biggest drop was among 25 to 34 year olds (18 percent) and third biggest was among 45 to 54 year olds (12 percent). The only age category to increase its use of e-mail in 2010 was 55 to 64 year olds (up 22 percent), which the report attributed to continuing Internet adoption among that age group.

"What's really happening is the emergence of so many new communications channels" such as mobile and social networks, said Andrew Lipsman, spokesperson for the Reston, VA-based research firm, which are siphoning off e-mail users. However, those channels are primarily affecting social communication, he said, accounting for the much larger drop-off among those under 17.

Social networking continued its rise as the dominant Internet activity, with nine out of every 10 Internet users visiting a social networking site each month in 2010. "Social networking sites accounted for 12 percent of all time spent online in 2010 with the average Internet user spending more than 4.5 hours on these sites each month," the report read. Women continued to spend more of their Web browsing time on such sites (17 percent) than men did (12 percent).

Facebook was still the 800-pound gorilla in the social networking space, adding millions of users and accounting for 10 percent of all U.S. page views for the year. Three out of every 10 Internet sessions included a visit to the site. Despite MySpace's very public struggles - its audience declined 27 percent and total time spent on the site declined by half - the News Corp. property held on to the number two spot.

Tumblr was a surprise success among social networking sites in 2010, upping its monthly visitors to 6.7 million, an increase of 168 percent. Formspring.me also caught on with young users, growing over 1000 percent for the year and attracting 5.3 million visitors in December.

Lipsman attributed Tumblr's success to its unique balance of blogging and social networking. "It seems to tap into a couple of trends in terms of social media," he said. "And I think the simplicity of it is starting to catch on."

In the search category, despite the continued marketing onslaught of Microsoft's Bing, Google maintained its share of about 66 percent. Yahoo sites maintained their distant second of about 16 percent despite a minor drop of about 1 percent, and Microsoft sites came in third with 12 percent, a two percent increase over 2009.

Google also dominated "powered by" searches, Web searches conducted at third-party entities that carry the branding of major search engines. Google owned 24 percent of searches on the "powered by" market, whereas Bing owned 6.2 percent. Last year was the first time ComScore tracked the "powered by" market.

“Mike, when my consumer walks into a supermarket, I’ve got 90 seconds to convince them to purchase my cold/flu product over my competitors”, explained an overwhelmed pharma client, “they’re affluent and armed with smart phones and I know how to capture their attention before and after they arrive, but how in those 90 seconds how can I grab their attention at retail? Do I need another iPhone app?”

Sound familiar? A common response from marketers unsure of how to reach consumers generally defaults to an iPhone app solution (as of January 2011 there are over 400,000). That’s not to say that an iPhone app isn’t the right answer based on certain business objectives but here are 3 main items this client hadn’t yet considered in marketing specifically at point-of-sale:

1. Download time

Filling most or all of the 90 seconds that our sick consumer (or a “sick support” group member making the purchase) is spending on a product decision with download time is time wasted. You may contend, “Well, even if we don’t sway or reinforce our desired decision, at least we’re loaded on that phone for later use.” From a CRM standpoint in order to drive compliance (in the case of pharma) and maintain dialogue when they leave the store there is great worth in that statement. But as in dating, you’ve got to talk to the opposite sex before they’ll consider marrying you.

2. Unmet needs

Put yourself in the consumer’s shoes. You’re the sick consumer with bloodshot eyes viewing row upon row of competing over-the-counter (OTC) remedies. What are some unmet needs the brand could fulfill using mobile technology?

“I need to save money”: Incentivizing purchase with mobile coupons (which depending on the retailer can be tricky from a redemption standpoint).

“I need to know how products compare”: an SMS-to-mobile website that serves side-by-side product comparisons (how this works: Users view an aisle hang tag with the call-to-action of texting “FLU” to 55555 and receiving a link which launches the mobile site).

“I need you to listen to my symptoms first, then recommend a product“: Often consumers suffer “decision paralysis” when trying to match symptoms to the most appropriate brand or even amongst the brands own product line.

“This one’s good for fever and cough, but this one’s good for flu and runny nose. But what about chills and fatigue?”

When this takes place we immediately start looking at ways to delegate our decision. Mobile’s inputting, interactive and intuitive features can create a seamless way for a device to make decisions for us. This is when mobile becomes an extension of our brain.

Here’s an example to illustrate:

If you’ve seen Robitussin’s latest “Relief Finder” mobile campaign featured in ads, you can see how this particular consumer need is conceptually met. Before even a mention of product information, a consumer first inputs each symptom that in turn offers the most effective remedy amongst Robitussin’s product line. It’s turnkey with an approachable, straightforward user interface. By eliminating confusion, the path to purchase is smoothly paved from the get-go.

3. Social Support

Taken from the lyrics of Amos Lee, “Who do you call to ease your pain?” Who do you contact when you’re sick?  What duty does each in your own “sick support” contact list serve? Perhaps Mom offers recommendations on what to eat, a roommate or spouse are in charge of movie rentals and your entire Facebook network, well, they just need to know. With mobiles primary function being a social connector what platforms or reward systems can brands provide that will add consumer value but remain just as seamless as a phone call, text or a status update?

A sickly consumer doesn’t wish to add social guilt to their current physical state, which can come with having to ask for support. So, there’s opportunity for a brand not only to fulfill the consumer’s needs (as discussed previous) but also now to reward the support group. Consequently you’ve now identified who the real-time influencers of purchasing decisions are. How can we keep them as part of the ongoing dialogue once the consumer checks-out as well?

My recommendation to get started: Don’t deliberate technology just yet. Break down your consumer into “wireless” behavioral segments including needs, wants and desires while in-store. Extract from these insights how your brand’s strategy can be inserted to drive them from consideration to checkout. The technology to support your mobile idea is likely available, and if not, develop it and become the front-runner. And before you pharmaceutical brands revert to, “it’s only going to get the kibosh” from regulatory (which I’ve experienced) don’t allow that outlook to creep in before exploring what’s possible.

Your Mobile Strategy should not be about the technology. Don't let the architects in the room pull you down the solutioning trap before it is time. Understand your end users first.

“Having a mobile strategy will be a key differentiator for enterprises and brands alike to maintain and build their customer base,” said Hetal Pandya, director of product management at Nuance, Sunnyvale, CA.

“Customers like to solve their own problems without having to speak with someone,” she said. “It is about convenience and consistent customer experience.

“Ensuring that they have figured out how their consumers will consistently discover their mobile service is key to their ROI.”

We knew that... you knew that.

A solid Mobile Strategy actually places more onus on the customer to take care of themselves. It is almost like we are treating our customers like grown ups. They can handle it.... go ahead, give them more responsibility.

But serve and service them well when needed.

Last month, Compete released the results of its Q3 2010 Smartphone Intelligence survey. One of the notable insights from the survey is that mobile banking usage is on the rise, with 40 percent of respondents reporting using mobile banking apps once a month or more. However, with only 6 percent of consumers using mobile banking apps daily, we also noted that mobile banking is not yet part of the consumer’s regular routine.

According to a new study by Accenture, banks enabling customers to use a mobile device to check balances, transfer money, and pay bills can achieve returns on investment as high as 300 percent. We also see financial services companies increasingly competing on application technology in order to attract and retain consumers. Clearly, financial services institutions have good reason to push for consumer adoption of mobile banking.

Curious about what challenges face marketers of mobile banking, we asked smartphone users who indicated they were not interested in mobile banking specifically why they were not interested. We asked about using smartphones to check account balances, pay bills, receive and redeem coupons, transfer money to friends/family (e.g. Western Union or PayPal), to find a local bank branch or ATM, to manage investments (e.g. buy or sell stocks), to purchase goods from retail websites (e.g. from Amazon.com or ebay.com), and to purchase goods at the retail point-of-sale (e.g. buy a coffee at a Starbucks store).

So why aren’t smartphone users interested in mobile banking?

Well, it really came down to two things – concerns about security and lack of a perceived need for the function. For each of the features we asked about, the number one or number two response was either:

• I don’t need to do this, or
• I don’t trust the security of my mobile phone for this

Other responses included:

• I am concerned there will be hidden fees if I do this
• I do not have a data plan with my phone that will allow me to do this
• The wireless connection on my phone is too slow to make me want to do this

These last three responses consistently accounted for less than 10-15% of the total.

Check out the chart above, and you will see that a perceived lack of need was the number one reason smartphone users said they weren’t interested in using their phone as a ticket, to make a point-of-sale purchase, to manage their investments, or to receive and redeem coupons. In addition, consumers are very concerned about security of the their phones, especially when it comes to using them to purchase goods from websites, transfer funds between accounts, or viewing bank account statements.

Addressing Security and Fostering a Sense of Need

The good news is that addressing security concerns and fostering a sense of need can be attended to in marketing messaging. A quick look at the mobile banking messaging at Bank of America, Wells Fargo, and Chase reveals that the dominant messaging for mobile banking across brands is “convenience.” With lots of room to build out marketing messages around security and benefits beyond convenience, this is certainly an exciting opportunity to connect with consumers.

NEW YORK, Feb. 9,  2011 – When banks enable their customers to use a mobile device to check balances, transfer money, pay bills, apply for credit or manage their personal finances, they can achieve  returns on investment of as high as 300 percent, according to a new study commissioned by Accenture (NYSE:ACN).

Banks generating the highest returns on their mobile banking investments achieved ROI by emphasizing customer convenience, providing rich exchanges of information between bank and customer and accurately measuring how customers use their mobile phones to bank, according to the research which was conducted by TowerGroup on behalf of Accenture.

“Bank customers want greater control over managing their finances and prefer to bank in ways that fit their lifestyles,” said Andy Zimmerman, director, mobility services, Accenture. “Technology is enabling customers to move beyond simple account notifications sent by text message from their banks to more sophisticated interactive applications.” 

According to Zimmerman, the mobile banking channel offers an opportunity for banks to create a meaningful dialogue with their customers, deepening loyalty and broadening the services to which their customers can subscribe. “Leading financial institutions that are communicating the value of these services to their customers are generating new revenue,” he said. 

“The pace-setting banks in this study have shown that high mobile adoption and return on investment hinges upon providing a suite of services that are relevant to their customers, educating customers on how to use mobile services and regularly measuring customers’ usage patterns and satisfaction rates,” said Noel Gordon, global managing director of Accenture’s banking practice. “The mobility market will continue to grow as banks adopt the best practices of those with successful mobile banking programs.”

According to the study, financial institutions with successful mobile banking programs:

• Fully understand customer’s expectations of mobility, such as their need to have the same experience on their smart phone as they have on their laptop.
• Minimize customer fees, which helps ensure greater customer engagement.
• Monitor and leverage the evolving functions of customers’ handsets and the platforms they use.
• Ensure that their staff is fully engaged in supporting mobile banking.

Successful programs can yield high return on investment

Among the 10 financial institutions studied, the key findings include:

• ROI of 300 percent. A Middle-Eastern financial institution has achieved a return on investment of at least 300 percent through customer education by showing its two million mobile banking customers how to access and use services, and offering new, convenient ways to pay bills online using their mobile devices, including “topping up” their pay-as-you-go mobile phones, paying utilities bills, or paying a fixed monthly fee for a premium services package.
• ROI of 230 percent. An Asia-Pacific bank has achieved a return on investment of 230 percent since launching mobile banking in 2007. It is transitioning from informational services – sending text message reminders to customers for example, to interactive services such as enabling customers to register online for mobile banking. The bank’s executives said the focus on engaging staff at branches and the call center was critical to success.  
• Annual customer growth of 60 percent. A European bank whose customers can check balances, transfer money between accounts and trade stocks with their mobile phones has achieved 60 percent annual growth of its mobile banking customers. The bank’s executives said support of multiple smart phone device platforms has contributed to success.

No time to post these days... So the best I can do right now is provide you with good content from elsewhere.

Zokem’s industry leading Mobile Life panel in the US from the year 2010 reveals that iPhone scores 84% higher in loyalty ratings than the nearest competitor, Google Android. Among non-iPhone users, the number one preference for the next smartphone is iPhone. The benchmark results by Zokem also show that older Windows Mobile devices and Nokia’s Symbian devices have already lost the game in the US. Both Microsoft and Nokia are, however, coming back with new offerings and trying to challenge the top three platforms – iPhone, Android and Blackberry – when measured by user loyalty.

During the year 2010 Android emerged as the single best selling mobile platform in the US. Out of individual device types, however, the few iPhone models that are available on the market are actually selling more than any specific Android device, and for the time being, Apple’s well-controlled ecosystem, including the iTunes app store and traditionally higher revenues per device, seem to make an unmatched combination. As a platform, however, Android is a fair competitor –and in certain numbers, bigger than iPhone – but the industry attention is still geared towards the iPhone as the leading smartphone platform, particularly in the US.
Zokem, a mobile analytics company focused on smartphones, is running mobile consumer panels in all major markets. The panels do not only measure what people do with mobile phones, but also track how loyal people are towards different phone models and carriers.

From the 2010 summary report that was published recently, a few figures are worth pointing out. First of all, “the figures suggest clearly that iPhone is the top performing platform in terms of user loyalty, and therefore, it is an increasingly likely pick for a repurchase” tells Dr. Hannu Verkasalo, CEO of Zokem. “Android is a good number two in the US market, even though the loyalty score is not nearly as high as it is for iPhones, but it seems that people who are using Android are also very likely to buy an Android-based device as their next smartphone too”, Verkasalo continues. Zokem is using a standardized net promoter score (NPS) to analyze user loyalty.

Figure 1.

Figure 1 reflects the loyalty that mobile users have for the phones that they are currently using. Net promoter score between -100 % and 100 %, is measuring the loyalty that people have towards the phone. Generically NPS score higher than 60 % is considered good. The only smartphone platform that exceeds that is iPhone, at 73 %. Google’s Android platform comes second, followed by Samsung’s Bada-based phones (Samsung has now shifted strategy more towards Android-based devices) and then RIM’s Blackberry phones. It is notable that two remarkable players, Nokia and Microsoft, received very low loyalty ratings for their own platforms. Also Palm’s Webos, sold to HP during year 2010, did not achieve a very high NPS score.

Figure 2.

Low loyalty correlates with higher churn, meaning the likelihood to shift to a competing platform during the next 12 months, as seen in Figure 2. There are, however, certain exceptions, like Samsung Bada, Palm WebOS, and Nokia Symbian S60. These platforms have suffered from lack of mass adoption, weak app stores, and relatively moderate push by US carriers. “Even though Samsung Bada, for example, received relatively good loyalty rating, most users were still committed to jump to one of the better known platforms, and therefore the churn for Bada was very high”, says Zhao Hanbo from the Zokem analyst team.

Figure 3

Figure 3 reflects some key correlations, underlining the fact that users of iPhones, Blackberries and Android devices are all more likely to buy a similar device in the future, rather than to change to a competing platform. The results are quite contrasting regarding Palm and Nokia phones, reflecting the fact that the weak platforms of today might be even weaker in the future.