Wireless Informatics Blog

‘Antennagate’ has forced something of a change in rhetoric from Apple. Having called a press conference to address concerns over the performance of the iPhone 4’s antenna, Steve Jobs walked on stage last week accompanied by a presentation slide that read “We’re not perfect”. For the next 90 mins, Jobs addressed the issue, reported Apple’s own findings and offered a fix in the form of a free ‘bumper’.

Yet, there was one section of his presentation that just didn’t stack-up (at least to the trained eye).  Jobs stated that only 0.55% of iPhone4 consumers had contacted AppleCare regarding the antenna. This, he suggested, was at odds with the level of media hype around the issue. With less than 1% of consumers contacting AppleCare, it obviously wasn’t a cause for major concern and wasn’t impacting everyone.

But Jobs was incorrect in making a direct comparison with the number of consumers who contacted AppleCare with the number of users who recognized and experienced an antenna problem.

The support landscape has changed fundamentally over the last five years. Consumers now embrace multiple support channels, from official care lines such as AppleCare to online support forums or simply asking a friend.

In a WDSGlobal report conducted in March 2010, we found that when experiencing difficulties with their mobile device, consumers where significantly more inclined to read the manual, consult family and friends or simply give up all together. Contacting an official support line from the handset manufacturer or mobile operator was far from being the most prominent support option.

It’s hard to know for sure, but Jobs’ language hinted at only 0.55% of consumers having “called in”. So does this figure preclude those that emailed or used the Applecare forums? We know, from our own research, that the preference for which support channel to use is also highly dependent on the demographic. The under 24 year olds prefer self-serve support options via the web, while the over 55 year old prefer the personal touch of a telephone care agent or even in-store support. Given the typical Apple early adopter, it seems likely that a large majority of consumers interacting with AppleCare did so via one of their non-telephone based support channels.

Perhaps uniquely, we must also factor in the media as a support channel. Consumers were being made increasingly aware of the problem, possibly even before they noticed an issue with reception for themselves, proactively through the media. Apple’s PR machine communicated potential causes and upcoming resolutions via the media (e.g. faulty formula – software fix, faulty design – free bumper/case). Given this ongoing communication the need for a consumer to call AppleCare for this particular problem has been significantly reduced.

This is by no means a criticism of Apple’s support service. Indeed its AppleCare service is class-leading, delivering multiple channels through which to engage. But this very acknowledgment of the many different support channels through which consumers like to engage must also be recognized when assessing the user experience impact of ‘antennagate’.

Earlier this week the Queen was given an exclusive tour of RIM’s HQ during her visit to Canada. Here she was presented with the latest model of smartphone produced by RIM, the Blackberry Bold 9700. Now, the visual assumption carved from the phrase ‘BlackBerry user’, is a far cry from our royal highness, an 84-year-old Grandmother. However as the first Monarch to send an email way back in 1976, proud owner of an iPod and genuine user of BlackBerry smartphone devices the Queen, like many other unexpected smartphone consumers, is no stranger to technology.

Increasingly, as smartphones become further engrained in the digital culture of today’s zeitgeist, a much broader array of consumers are becoming exposed to the joys of smartphone ownership. The configuration of the advanced services that smartphones enable including email, internet, GPS navigation, etc., can become somewhat frustrating for even the most tech-savvy characters. A 2010 study commissioned by WDS showed that 1 in 5 of us experience difficulties with email set-up. We don’t doubt that the Queen will have someone on hand to deal with any inconvenient stumbling blocks in the set-up of her new BlackBerry device, however, unfortunately not everyone enjoys these types of resources, instead relying on the support from their network operator.

The rapid growth of the smartphone segment has presented many challenges to network operators introducing these complex devices to their portfolio. Although smartphones open up new and exciting revenue generating opportunities, operators must manage the growing support burden involved with supporting mass-market consumers in navigating more complex products and services.

In addition to the support burden, many other factors come into play in the operators struggle to maintain profitability, including an average subsidy cost of US$200, double that of featurephone devices, unlimited data plans that have placed unprecedented strain on high-speed data networks and threaten the user experience, and the consumers likelihood to abandon services altogether decreasing their revenue generating potential.

The flux in support costs seen as a result of introducing new smartphone technologies will improve as efficiencies are identified and deployed, meanwhile operators need to ensure this process is accelerated.

So it’s done. The death knell for unlimited mobile data seems to have been rung following the announcement that AT&T in the US and O2 in the UK will scrap unlimited data plans for new subscribers.

The industry has created something of a perfect storm for mobile data. After years of being left in the wilderness, a combination of cheap price plans, heavily subsidized smartphones and compelling apps and services, has seen mobile data usage explode to a level that is now causing concern among industry executives keen to balance quality of service and profitability.

In the early days of data, pricing products and services to lower the barriers to entry made sense. Mobile operators needed to capitalize on their 3G investments and voice revenues were stagnating. The launch of the Apple iPhone in 2008 delivered mobile data to the masses in the form of compelling applications and the industry responded.

In the following years, the availability of cheap smartphones and products such as mobile broadband dongles, air cards and mifi units came thick and fast. In Western Europe and North America, half of all new handsets sold by the end of 2011 will be smartphones and it’s expected that over the next five years there will be a 20 fold increase in data traffic. Central to this success was the availability of unlimited data plans. The ‘all-you-can-eat’ pricing model finally removed the single biggest barrier to mobile data, the threat of bill shock.

It seems, however, that the level of consumer demand for mobile data has surprised even the largest operators. AT&T and O2, both beneficiaries of  the iPhone’s success thanks to early exclusivity deals, have made very public statements over the last year regarding the ‘data crunch’.

Both operators have experienced quality of service issues from the growing population of smartphones attaching to their networks. The CEOs of both companies have made public statements about the data ‘crunch’; the CEO of O2 going as far as making a public apology to his London customers where the huge popularity of uber-cool iPhones, and a highly dense urban environment was only ever going to end one way.

Much of the problem comes from the phones themselves, and not necessarily from the amount of data being downloaded. Instead it’s how today’s smartphones manage ‘signaling’.   Many other connected devices, such as laptops and netbooks, maintain an open channel to the data network. Smartphones just don’t have the juice to maintain this connection and instead many are built to drop the data connection as soon as requested data is received. However, many smartphones, more precisely their applications, routinely signal the network for status updates. Nokia Siemens Networks estimates that each update can generate up to 20 signaling messages. With some smartphones repeatedly awakening themselves to check for updates every two minutes, the signaling traffic from a single device in a day is comparable to 1,000 voice calls.

Strictly speaking, changes to price plans won’t have an immediate and direct impact on the signaling burden; that’s a handset and application architecture issue. What it will do is allow operators to better control usage and meter it for the benefit of all subscribers, rather than the minority that represent the majority of traffic.

Suggestions that change was needed came from AT&T CEO, Ralph de la Vega last year. He told the Wall Street Journal “Many customers don’t know how much bandwidth they’re consuming. When AT&T conducted a broadband test, customers often reduced their data use. Longer-term a pricing scheme based on usage is likely, though it will be determined by industry competition and regulatory guidelines.”

This week, that change happened and a few days later it was followed by O2. Both have introduced tiered pricing, with a capped limit depending on the price plan. The argument from both is that in reality, even with unlimited data plans, consumers get nowhere near the fair-use policy applied to unlimited plans. O2’s cheapest contract plan will be 500mb p/month (£25). The operator says that 500mb is actually two and half times the average O2 consumer’s current use. In practice this means that consumers should be better off financially (the cheapest monthly data tariff is currently £30). The operator promises it will be able to deliver a more consistent experience and increase the quality of service for the subscriber base as a whole. Forecasting data consumption will also be more accurate for the operator, in turn helping to grow the thin margins that face today’s competitive mobile data markets.

AT&T consumers will be faced with a choice between DataPlus, a $15 data plan capped at 200mb, or DataPro, a $25 plan capped at 2GB. Overage charges will be $15 for a further 200mb or $10 for a further 1GB on the respective plans. Both plans provide a saving of $5-$15 when compared to the previous unlimited plan. AT&T argues that this effectively makes data even cheaper for the majority of users.

By introducing bands of usage the operator can impact consumer behavior in data consumption. When consumers are confronted with the choice, many will instinctively look to manage their data consumption to fall in line with the lowest tier, actively looking to restrict their data usage to reap greater savings. AT&T plan to encourage better management of data consumption with regular (and free) text and email notifications to alert subscribers surpassing 65%, 90% and 100% of their data allowance. The intention is that this change in behavior will decrease overall data traffic suffered by the network and provide a higher QoS for consumers.

However, the question remains of whether consumers actually know what a megabyte of data gets them. If they don’t, and they start to ration their data usage for fear of surpassing their data cap, are we in danger of stifling the growing market for data applications and services?  Tiered pricing also doesn’t remove the signaling burden.

Ultimately, with the spectrum crisis looming, data has become a commodity in progressively short supply. Allowing subscribers to consume excessive levels of data at no extra cost is unrealistic and unfair to the majority of consumers who subsequently suffer poor QoS as a result. Others would argue that the operators have brought this upon themselves and if they offer unlimited data then a consumer should not be penalized for taking full advantage, and that if their network infrastructure isn’t up to scratch they should fix it.

Conspiracy theorists among you will have probably noted that both AT&T and O2 have strong links with Apple and that the removal of unlimited data plans coincides neatly with the launch of the iPhone 4. The iPhone is notorious for fueling data consumption, and both operators will want to ensure that their networks are not placed under undue strain as existing iPhone owners upgrade and leverage increasingly data hungry applications such as FaceTime.

Like it or not, the days of unlimited data are numbered. The data goldrush is over. Operators have spent millions acquiring customers, it’s now time that they start focusing on maintaining profitability. At current rates, despite a predicted 20 fold increase in data traffic over the next five years, operators only stand to see a two fold increase in associated revenue. The goal, therefore, has to be lowering the cost of delivering a megabyte of data. Tiered pricing won’t do this directly, but in time, if operators can better educate consumers on data consumption then it’ll certainly help in the creation of a more ordered and metered ecosystem.

Attendees at last month’s BlackBerry conference (WES 2010) were treated to a sneak peek of the forthcoming BlackBerry 6 operating system. But what will BlackBerry 6 do for RIM in the now highly-competitive smartphone market?

When first launched, BlackBerry positioned itself as a productivity tool aimed at prosumers and the enterprise segment of the wireless market. In providing reliable and easy-to-use products that delivered an integrated email, messaging and voice experience, RIM quickly grew a reputable enterprise brand.

The smartphone market has since experienced rapid growth. The segment has progressed through the technology adoption cycle and leapt the ‘chasm’ into the mass-market, forcing many OEM and OS brands to realign their strategies.

Differentiating smartphone brands

Smartphones are characterized by advanced operating system and it is this feature that is quickly dominating the landscape. (Relative) newcomers to the OS market, such as Apple and Google, have leveraged OS advancements to execute strategies focused on third-party ecosystems of content and services that allow new levels of device personalization. This has allowed both to form defendable positions in the smartphone market.

But what of BlackBerry? The brand has already expanded beyond the enterprise market and into the wider consumer markets. Homogenizing the BlackBerry experience even further to cater to both enterprise and consumer users would potentially leave RIM exposed. So what is BlackBerry’s defendable niche?

The evolution of messaging

As the smartphone market continues to evolve, so too will user behavior. Consumers have more choice over the communication channels on offer to them. Email, IM and social network services such as Twitter and Facebook, are offering experiences far richer than SMS. We can already see evidence of this shift in the youth market. A recent WDSGlobal survey of over 2000 consumers in western markets found that in the 16-34 age bracket 25% use social media on their mobile on a weekly basis, 22% use IM and 34% use Email. This segment often offers an early indication of the overall direction of the market. Indeed, SMS usage among the youth market in China has actually dipped for the first time ever as the under 30’s adopt social networking services.

A surprise hit, BlackBerry’s IM service, BlackBerry Messenger (BBM), has benefited from this shift and acted as a catalyst for BlackBerry ownership among a wider demographic. Originally born out of RIM’s messaging heritage, BBM combines the best of SMS and IM to form a simple but satisfying service. It has been a huge success and generated an almost tribal following amongst a variety of consumer types, from the forty-something professional through to gossip hungry teens and young adults. Unlike other forms of messaging, BBM can only be used to exchange messages between BlackBerry devices. This exclusivity factor has added-value for BlackBerry users and has become the de facto IM client for many owners.

The sneak peek offered by RIM of its forthcoming BlackBerry OS 6 gives us a glimpse at how the BlackBerry brand is starting to embrace this new shift in device ownership, messaging and communication. Some exciting improvements to native applications include; a ‘Social Media Integration’ app which manages social media and RSS feeds, a revised media application for music, video and camera and an app that seamlessly integrates messaging services such as Google Talk, BBM and AIM. BlackBerry has also kept many of its existing applications and features, acknowledging the social media and entertainment needs of their newer consumer types yet remaining clearly focused on messaging to maintain a clear market differentiation.

The sneak peek also shows-off a vastly improved visual experience taking full advantage of mobile graphic processing units, with crisper graphics, new icons, animations and transitions.

Touchscreen

BlackBerry OS 6 will be compatible with both touch and non-touch devices. RIM has been slow to the touchscreen market, and was knocked by the mixed reaction to the touchscreen experience on the BlackBerry Storm. Following the success of touchscreen interfaces on other platforms, BlackBerry rushed to develop a touchscreen phone for its portfolio. The Storm’s release in 2008 saw numerous software glitches that had to be iteratively fixed. The UI was designed around the technology, rather than the user and BlackBerry arguably failed to appreciate touchscreen technology as a component used to ‘compliment’ the user experience not to define it.

It’s good to see that RIM hasn’t thrown-in the towel and OS 6 home demonstrates a revised approach, bringing the focus back to the user.

One of the most anticipated features of OS 6 is RIM’s tabbed Webkit-based browser. This features a faster java script engine, touch gestures for zooming and tools for sharing favorite pages. This should increase the appeal of BlackBerry considerably as the modernization of its web browser has long been required.

Homogenization of the smartphone

The homogenization of entertainment, lifestyle and office tools has recently become a regular theme for the smartphone segment as the market attempts to appeal to the needs of the entire market within a single UI layer and OS. However consumers are arguably becoming overwhelmed with choice as it becomes increasingly difficult to differentiate smartphone offerings.

In BlackBerry OS 6, RIM has recognised the need to fulfil a wider range of consumer needs as they continue to expand beyond their traditional user base. However they have done so while retaining a clear focus on messaging and communication. This focus is what built the business into the market leader it is today, and this is what will defend that position.