Softbank, which owns Japan's third-largest mobile carrier, just announced that it will buy a 70% stake in Sprint Nextel. What exactly will that mean for wireless customers?
First, a little background . . .
In our new book,Outside In, my co-author Kerry Bodine and I describe the customer experience turnaround that CEO Dan Hesse engineered at Sprint. By relentlessly identifying the top problems that customers called to complain about and then systematically eliminating those problems, he took the company from having the lowest customer satisfaction rating of any major US carrier to having the highest customer satisfaction rating. Fewer unhappy customers meant fewer calls to Sprint's contact centers. As a result, Hesse recently reported that Sprint saves $1.7 billion a year from averted call center contacts.
Hesse’s current challenges have centered around shareholder displeasure with the cost of licensing the iPhone and the cost of building out Sprint’s high-speed network capabilities. As I said in a previous blog post, that lack of shareholder support seems strange to me. Isn't it obvious that it's critical to offer customers the smartphone they want and a fast network with a lot of capacity to support that phone — especially in a world where they have so many choices? It should be.
In contrast to current Sprint investors, Softbank President Masayoshi Son understands that smartphones and the networks that fuel them are essential: Not only is Softbank already building a high-speed network to help it compete in the smartphone war in Japan, but also Son said that the iPhone 5 was a trigger for the Sprint deal.
Last week I got a question via email from one of Forrester’s clients, who asked:
“How do you explain the success of companies that consistently provide a poor experience but perform well financially?”
I wish more people asked this question because it shows that they’re thinking about customer experience in the right context: as a path to profits. Here’s my answer:Creating a superior customer experience is the most important thing that companies need to do. But it will never be the only important thing they need to do.
My co-author and I describe the relationship between customer experience and other factors that lead to business success in Chapter 13 of our new book, Outside In:
“Is customer experience a silver bullet that will kill off all your company's problems and make your stock price soar? No. If there is such a bullet, we haven't seen it. The fact is, regardless of your customer experience, you can still get clobbered by a big, strategic threat like a new market entrant (Netflix if you're Blockbuster) or a substitute product (digital photography if you're Polaroid). That's especially true if the new market entrant or the provider of the substitute product offers an amazing customer experience (Amazon.com if you're Borders or Barnes & Noble).”
When you have a virtual monopoly, you can get away with providing a poor customer experience — right up until you can’t.
It does not come as a real surprise that the deal aimed at merging AT&T's and Deutsche Telekom's US wireless operations got nowhere. We were expecting as much back in autumn. In our view, there are no winners as a result of this dropped deal, not even the US consumer. The US consumer can look forward to poorer network infrastructure and a weakened T-Mobile as the low-end market provider. Hence, the Federal Communications Commission and Justice Department attained somewhat of a Pyrrhic victory.
Whilst the collapsed deal is a major irritant for AT&T, it is a disaster for Deutsche Telekom, as it leaves T-Mobile US in a very difficult position. With about 10% of the US wireless subscribers, T-Mobile US remains subscale. Its image is increasingly trending toward cheap rather than good value, given its patchy network coverage, especially in rural areas.
The reluctance by Deutsche Telekom to prepare for a "no-deal scenario" leaves T-Mobile without a clear strategy. This lack of direction is very risky and only pushes T-Mobile further down a slippery slope toward increasing churn and revenue and margin challenges. Deutsche Telekom needs to communicate its plans for 4G roll-out, spectrum purchases, partnerships for network sharing, and device portfolio. Above all, Deutsche Telekom needs to decide soon whether to pursue an IPO, a sale to another operator or a financial investor, or target a merger with the likes of Dish, Leap, Clearwire, Sprint, or even LightSquared. Ultimately, we expect Deutsche Telekom to opt for a merger scenario.
Among the biggest strategic questions facing eBusiness & Channel Strategy executives are how to make use of the growing potential of the mobile channel, how to integrate mobile phones into their company's multi-channel strategy, and how to meet customers' rising expectations for mobile services.
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I recently returned from a trip to the UAE (Dubai mostly) and Oman. While there I did a bit of research on my own - just talking to folks about how they use their cell phones and so forth. I also had the chance to interview the head of mobile banking services in EMEA for a large, global bank. More on how global banks are avoiding building new branches by offering mobile banking services in another post.
First, I took the public bus from Dubai to Oman. The average income per family in Oman is far below that in the States - probably less than half. Gas and other utilities are cheap as is education and healthcare. That said, we know that cell phone usage has little to do with income. One of the first things I noticed is how many of the men had at least two cell phones. My initial hypothesis was a work phone and a personal phone. I was soon corrected by my guide who drove me up to Jebel Shams. In a country where men can have more than one wife, apparently more than one cell phone is necessary. My guide's father has five current wives, but has had nine all together. My guide had two cell phones and a lot more SIM cards.
My guide was 37 years of age. He had four children and seemed to have an about average income. He worked in sales when he wasn't serving as a guide. He's probably easily one of the most sophisticated cell phone users I've ever met. His cell phone was his portable media player for both music and video. I was astonished by the number of videos he had sideloaded from YouTube. The ringtones were pretty much driving me crazy after about 15 hours in a car with him road tripping. He only had a couple of different ring tones and his phone rang a lot.
I give my colleague Charles Golvin credit for finding this article on the official Google blog. I'll be working on a report on the intersection of social and mobile in early 2010 so please send me more examples if you have some. I'm especially interested in the role of social/mobile in the Retail environment.
Google is mailing out storefront window stickers to 100,000 local businesses in the US. (see their blog post for complete information). If you have the right type of phone and supporting software, you can take a photo of the code on the sticker (see below) and you'll be taken to that business' PlacePage on the Web. The service will show available coupons, allow for ratings, get reviews, etc.
Here is their post on the applications that work with the service:
HitFix launched their iPhone application at the beginning of last week. They basic service provides entertainment - movie, TV, performing arts - listings near where you are or where you live.
I judge the quality of mobile services within the context of the Convenience Quotient. (See report). I define the benefits of mobile services as immediacy (value of having the information or service now), simplicity and context. This service does all three fairly well though I'd like to see it do more.
Immediacy - let's me see what is playing nearby and soon. Would love to see the application go beyond pure forms of entertainment like films and TV, but this is a starting place. I would have liked to see local festivals and street fairs ... or "Christmas Tree Lighting in GG Park," but I know this is hard.
Simplicity - Let's me link to an area to purchase movie tickets from within the application. That seems basic, but it is not a no-brainer to get all of these partnerships lined up. If it could link to my DirectTV DVR service so I could record TV shows I find within the application, that would be cool.
Context - uses my location/shows me what is nearby.
They also do well to help with discovery by promoting the iPhone application with two banner ads on their home screen. The link falls short though by simply connecting me to the Apple web site where I can download iTunes - it doesn't give me directions for finding the application within the App store or give me much of a description.
My answer to this question was, "never" until a couple of years ago. Sure, I was more likely to make a phone call on my cell phone than on my computer, but that is to be expected - it has traditionally been designed to be a voice communication device.
Opting for my cell phone rather than my laptop first started for me a couple of years ago. I began using SMS as a substitute for email. Then I started using email on my Blackberry because it would boot faster than my computer. Next came Google SMS - for me it was soooo much faster to get a phone number for a business through Google's SMS service than to call (ok, which costs money) or look online. Then, I got an iPhone and started downloading all kinds of applications. Some I barely use, but .... there are quite a few that I use rather than comparable experiences on the PC. These include Facebook (I'm more likely to be doing something interesting when I'm out and about), Scrabble (tallies the score for you), and maps (stopped printing all those maps out) among others.
For all of these services whereby I opt for my phone rather than my PC, I do so because the experience on the cell phone is more convenient. That means the benefits outweigh the inhibitors to use. When it comes to mobile services, there is convenience when there is value to the immediacy of the information or service, tasks are simple to execute and there is context - like my location.
We lay out this framework in our newly released report, "The Convenience Quotient of Mobile Services: A Facebook Case Study."
Many innovative start-ups have pioneered mobile social networking in the last few years: BuzzCity, Peperoni, Fring, Nimbuzz, eBuddy, Zyb, Plazes, Loopt, Foursquare and many others demonstrated the potential of the market.
In the last few months, a bunch of announcements clearly showed that the convergence between mobile and social computing is gaining traction and attracting the largest stakeholders:
Ok, so there is a bit of wait and see until Monday when the FCC Chairman makes the anticipated announcement, but here's a first take:
Who, I ask, is on the side of the consumer? This WSJ article discusses how Obama is taking the side of Silicon Valley. Republicans seem to be taking the side of the carriers. WHO is on my side as a consumer?
Most consumers are NOT demanding the ability to stream unlimited video to their cell phones. In fact, very few are even looking for video capability in their next handset purchase. If you are a Forrester client, come ask me/us for the data - we can show you. Consumers are more interested in their battery lasting all day than streaming video ... which will kill it.
What consumers WANT from their wireless service providers is high quality, reliable voice services. Really, it is. We ask consumers year in and year out what it is they want in a wireless service provider. Quality of service and value always come out on top.