3GSM World Congress 2004 – An Analyst’s View

14th April , 2004

Europe : As many of us were at this event, and the rest of us heard much about it, I am not going to rehash the same overview of the conference or exhibition. Instead, I plan to give you opinions of the show through an industry analysts eyes. At this stage I must make it clear that the opinions in this article do not particularly reflect those of my esteemed colleagues who also contribute to this fine newsletter.

One of the questions I get asked a lot after the 3GSM World Congress in particular is “what do you think the major theme of the show was”. Every year there seems to be a message that the attendee can take away from the show. This year, there were mixed messages – probably the one that came through the most was:

“We are getting there…”

The industry seems to have accepted the fact that the revenues from data and 3G services will not happen immediately but that through a lot of hard work and a little co-operation, things will happen in the long run.

That said, the mobile industry’s capability to get caught up in ridiculous hype never ceases to astonish me. Most operators have not yet launched 3G services, but now they are being told to implement HSDPA (High Speed Downlink Packet Access) – and some even seem to have fallen for the hype… I do understand that the vendors must make an investment in marketing now for future sales – but let’s face it – the 2G version (EDGE) has not yet taken off in Europe!

But despite this and a few other exceptions, the congress was generally without much of the hype that it has been famous for over the last few years. This is a good sign. One felt that the people at the show had stopped talking about changing peoples life’s, changing the way people view their mobile phone, changing the way people communicate etc etc, and had got down to the dirty business of actually making money! Operators seem to know a lot more about their customers, and are using that information to better up-sell more advanced services, such as video streaming, driving directions and possibly even push-to-talk (PTT).

PTT was discussed at last years show, but few thought we would see commercial services in Europe as soon as 2004. However, this will certainly be the case – and at last we will see Nextel-style services offered to the masses in Europe and Asia. Hopefully the operators will learn from the Nextel example and initially target the services towards the vertical segments that have the greatest requirement for such services – instead of trying to make it an instant mass market application – for without an extensive range of handsets that support the service, it is bound to disappoint the consumer segment.

MMS services seem to have finally come of age, and the Congress audience seemed to be encouraged to hear about a number of services that were a success around the world. While the proportion of people using MMS is still quite small, in most countries it is growing at quite a rate, and many operators seem to have found at least one application that has been successful.

One very encouraging feature at the 3GSM World Congress in 2004 was the general lack of the terms 2G, 2.5G and 3G. In fact, we didn’t even hear the term 4G thrown about too much! The conference organiser (IBC) seemed to be the only company that tried to continually ram the term 3G down our throats – and this perhaps is reflected in the fact that the GSMA is taking over the management of the event from 2005 – which seems to make sense seeing as they are the ones who are directly influencing the mobile community – not IBC. The operators and technology and services vendors are finally talking about mobile services – not mobile technologies. And they even seem to be learning from other industries and providing services that their clients actually are interested in. Voice and SMS are back in style – and some operators have even tried to stop the practice of taking content designed for a TV or PC-based audience and reformat it for the mobile devices. Instead, the more advanced operators are delivering services that are truly useful to people when they are on the move – or are providing content that is exclusive to the mobile handset. Interestingly, these are the operators who are also doing well in relation to the proportion of their revenue coming from non-voice services.

The battle between Nokia and the operators has never been so pronounced as at the Congress this year. While Nokia will never be seen making negative or derogatory remarks about an operator, operators such as Vodafone publicly criticised Nokia for their lack of co-operation on helping tailor the handsets to the operators’ individual requirements. It is clear that both Nokia and the operators want to be the number one brand – but as in all battles there can only be one winner, and it is still unclear whether this strategy of Nokia’s will see it dominate the mobile market, or make it a less important player.

In a round-up of the major vendor’s presence at the show:

Nokia: busy stand and typically impressive – not too much “new” content on the stand, but this is a good thing – when your customers are saying “steady on old chap – we haven’t worked out this GPRS thing yet” it is good to see some equipment manufacturers looking at advancing their existing solutions instead of coming out with a hundred new “essential” pieces of hardware.

Ericsson: busy as usual – as a powerhouse in the infrastructure business you expect their stand to be busy. Again they seem to be concentrating on their existing successful solutions and not too much focus on future concepts.

Siemens: Sorry – is that a re-badged Motorola handset you are demonstrating 3G services on? Busy stand, but seemed to lack depth. Some great technology but they need to sell the benefits more.

Alcatel: Typically busy as the conference is held in France – but a fringe player in some respects (can you please drop the handsets and focus on your advanced network solutions and the added benefits of signing up with Alcatel – such as access to some great applications developed in the 3G Reality Centres around the world!).

Lucent: To be honest, I was scared to enter the Lucent stand for fear of being harassed by the twenty or so bored staff who all had no one to chat to throughout the show… also I was a little worried I might be hit by one of the tumbleweeds blowing through the stand… ok – a little harsh, but these days Lucent has little presence in GSM or WCDMA (on a positive note, they are still very strong in CDMA).

Nortel: Another player being marginalised by Nokia and Ericsson in the GSM and WCDMA space. They still have a decent presence, but don’t have the wireless-centric brands that seem to propel Ericsson and Nokia to the many contract wins that they have had. Their solution is focussed on the typically bullet-proof core networks that Nortel is now famous for. They seem to still be serious about the wireless market though, so one to watch.

Every year when I leave the 3GSM World Congress, I say to myself “never again”. But I guess I will see you all again next year…

Written by Tim Sheedy, The Research Room

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