During its European Analyst Summit in London, Huawei provided details regarding two crucial elements of its expanding market positioning: It outlined its intention to launch mobile devices and enterprise solutions. Although Huawei has been engaged in these activities in China for some time, it is a new and exciting step for its European strategy. Competitors should not underestimate Huawei’s ability to take business away from them in these areas.
Huawei’s mobile device range for Europe is small, but very effective. The company targets the low-end smartphone segment with a €100 device (Blaze), the mid-market (Vision), and high-end (Honour), in addition to a tablet (Media Pad). The marketing strategy is to position these devices as affordable, easy-to-use, and reliable (i.e., the “Volkswagen of the mobile devices”). All devices are touch, have fast processors, crisp screens, and retail at about €100 below competitors’ offerings. Timing is good for Huawei, given the relative weakness of the competitive landscape, especially RIM and Sony Ericsson. Initial customer feedback on sites such as Amazon.com reflects positive customer experiences.
The fact that Huawei has no consumer brand in many European countries should not be a great obstacle. Rather, Huawei could use this factor in order to involve its emerging customer base to build a brand using social networking and viral marketing. Traditional big-board advertising campaigns would be pointless: Nokia will dominate the traditional channels with its Lumia campaign in the coming months. The main channels for Huawei will be MVNOs like Fonic, consumer electronics outlets like Phone4U, as well as selected larger operators.
One of the (many) things I have been working on for the past few months is this year’s European Marketing & Strategy Forum, which is taking place on the 16th and 17th of November at the Grove, just outside London in Hertfordshire.
Our theme is about driving innovation for the next digital decade and what that means for leaders. We’re particularly focusing on some of what we see as the big disruptions of the coming digital decade: the growth of mobile Internet use; the growing demographic diversity brought by ageing populations; and the increasing economic weight of emerging economies, particularly the BRIC (Brazil, Russia, India, China) countries
I’m particularly pleased that we’ve got such a strong line up of eBusiness and channel strategy executives presenting this year, including:
European marketers are as excited about social media today as ever before. In fact, according to our annual survey, three-quarters of interactive marketers in Europe either already use social media or plan to use it by the end of 2011 – and they expect social media marketing to grow in effectiveness more than any other online or offline marketing channel in the coming years. But there’s a problem: European marketers still aren’t spending very much on social programs. In fact, a quarter of the marketers in our survey plan to spend less than €35,000 on social media this year – and many of the rest won’t spend much more than that. And most European marketers said they had no plans to increase their social media budget this year compared to last.
I think this lack of spending is both a symptom, and a cause, of problems inherent in how European marketers use social media:
It’s a cause, because the resources aren’t there. One of the biggest problems social media marketers face right now is a lack of resources. When it comes to social media they have trouble finding budget, staff, time, and even good help from their agencies. And that actually makes a lot of companies afraid of success. You’d be surprised how often I hear statements like "I want to start a Facebook page, but what if it takes off? I don’t have the budget to staff it full time!" When marketers are afraid of success, rather than failure, then you know you’ve got a problem.
One of the findings that struck me most during our research was the growing popularity of PayPal. That PayPal is used by many online shoppers across Europe is well known, and partly explained by the success of eBay. What struck me as new is how many big European online merchants now accept PayPal, among them leading fashion retailers and airlines. Perhaps I didn't spot that sooner because the British merchants have been much slower to adopt than those in Italy, Germany, France and Spain.
The growing acceptance of PayPal raises questions for two groups of eBusiness executives:
If you work at a retailer or other merchant, is it time you accepted PayPal payments online?
If you work at a bank or card issuer, what does the growing use of PayPal mean for your relationships with your customers?
For both groups, what payment methods are customers likely to want as they start buying from tablets and mobile phones?
What do you think?
If you are a Forrester client, you can read the full report here.
After six years at Forrester, Alexander Hesse has decided to leave Forrester to take on a new challenge in a different field. It's always a sad day when you lose a respected colleague and I wish Alex the very best.
We're looking for a new senior analyst to join our eBusiness and channel strategy team, preferably based in Amsterdam. We're looking for someone with strong views on eBusiness and channel strategy, an analytical mind, and experience of the complexities of retail financial services and of different European markets to help our clients make the right business decisions and shape their firms' strategies.
We are publishing a new Forrester report today on the European tablet market. With the recent launch (and huge marketing push) of the Acer Iconia Tab and Samsung Galaxy Tab 10.1 in multiple European countries, one might think that things were looking up for Android tablets in Europe — but that’s not the case. In our report, we found that:
Europe is, and will be, a huge market for tablets. We are projecting that EMEA (Europe, Middle East, and Africa) will account for 14.5 million, or 30%, of worldwide consumer tablet sales in 2011. Three times as many Europeans as have tablets today say they are interested in buying one in the future.
Outside the UK, Apple could be vulnerable to competition. Apple has 52 Apple Stores in Europe, and 30 of them are in the UK. (For reference, there are 238 Apple Stores in the US.) Apple’s brand and channel presence is not uniformly strong in Europe; Mac ownership, for example, is lower in every EU-7 country than it is in the US.
But no competitor has met Apple’s challenge. Despite Apple’s potential vulnerability, we estimate that Apple still has 70% market share for tablet sell-through to consumers in Europe. (Sell-through is different from shipments; our interviews with European retailers confirmed that non-iPad tablet inventory is sitting in the channel — i.e., manufacturers are shipping more tablets than consumers are buying. So if you read reports that Apple has a lower market share, look at whether the report is measuring shipments or sell-through.) What’s more, non-iPad tablet competition is quite fragmented — OEMs, operators, and niche players form a crowded marketplace but one notably devoid of shoppers. iPad competitors’ prices are too high, and no competitor has matched Apple on content or channel strategy.
As a geographic unit, the market for business and government purchases of information and communications technologies (ICT) in Western and Central Europe will grow by 3.8% in 2011 (measured in euros), compared with 6.4% growth in the US (measured in US dollars). Excluding slow-growing telecommunications services, the information technology (IT) market in Western and Central Europe will grow by 4.5% in euros vs. the 7.4% growth in US dollars in the US (see June 7, “European Information And Communications Technology Market 2011 To 2012 -- The North-South Divide Persists, With Wide Variations In Country Information And Communications Technology Growth”).
For the past few years I have watched enviously as the Finovate online financial technology show has gone from strength to strength in San Francisco and New York. So I was thrilled to hear that Finovate was coming to Europe and today I was lucky enough to go along to the show in London.
For those of you who aren’t familiar with Finovate, it’s a fast-paced format with seven-minute live demos and pitches from 35 financial technology vendors. It’s produced by Online Financial Innovations, the people behind the excellent NetBanker blog.
Rumors became official on Tuesday: Siemens succeeded in finding a viable partner to buy its IT Solutions and Services (SIS) business. For all of us following the market in the past it wasn’t a surprise that ATOS ORIGIN is paying €850 million to take over Siemens’ IT business. This sum is a mixture of shares, bonds and cash, which will make Siemens a prime shareholder of ATOS for at least for a five-year period. In return ATOS will provide Siemens with Managed Services and System Integration worth €5.5 billion over a period of 7 years.
Question: What does this mean?
In the short run, even though this transaction will make ATOS the biggest European-headquartered IT service provider (with an expected combined revenue of approximately €8.7 billion in 2010 growing to an expected €10 billion in 2013) the direct impact for the IT user market will be minor. The mentioned outsourcing contract effectively represents one of the largest deals globally, but the impact on clients will be minimal as SIS delivers a significant amount of services to Siemens today. Second, ATOS ORIGIN is currently running a major restructuring program called TOP. And those projects combined with an acquisition of the mentioned size will be a challenge — at least. Thus meaning that ATOS ORIGIN’s focus will either be to finish the TOP program and then integrate SIS or extend TOP to include SIS. Either way the new organization will need some time to form — and so will the market impact.
Earlier this year, Josh Bernoff and Augie Ray introduced a new way to look at influential consumers called Peer Influence Analysis -- and showed off some great data from the US market to support their analysis. I’m pleased to report that we now have this same data available in Western Europe as well.
Peer Influence Analysis introduces that idea that there are two distinct groups on influential consumers online: 1) the Mass Mavens who use blogs, forums, and review sites to share complete opinions about brands and products online (creating what we call "influence posts"), and 2) the Mass Connectors who use sites like Facebook and Twitter to connect their friends to influential content from companies and consumers (creating what we call "influence impressions"). Josh and Augie found that both types of influence were highly concentrated: In the US, only 13.8% of online consumers create 80% of influence posts, and just 6.2% of online consumers create 80% of all influence impressions.
Somewhat remarkably, in my new report on peer influence in Europe, we found that peer influence in Europe is further concentrated still. Across Western Europe, just 11.1% of online users create 80% of all influence posts -- and only 4% of online users are responsible for 80% of all influence impressions: