Snapshot of the Mobile Market

Mike Mace recently penned a post that takes an in-depth look at the mobile and data services markets and makes a number of really interesting observations based on his research.

In the case of mobile data, Mike surmises that the market is basically segmented into two sections. Those who want 'value added' services and those who don't. In other words, are you a power-user who wants to maximize the functionality of your smartphone, or are you primarily interested in calling people and sending text messages? He says the market is currently a 65-35 split where the vast majority of the market 'do not' want to pay for extra services ie, data plans. The interesting thing to watch going forward will be how much of the current majority who do not want to pay for extra services eventually migrate into paying for some. I'm guessing we're going to see a sizeable movement toward making this equation much closer to a 50-50 split as these convergent mobile devices continue to become more user-friendly coupled with a softening in the retail acquisition costs as more competition floods the marketplace. Eventually, it would seem logical that the current 65-35 ratio could completely flip-flop where the majority have and are paying for some form of data plan.

Mike also breaks down the smartphone market into 3 sections - Entertainment Users, Communication Users and Information Users and suggests that any device that isn't specifically marketed to one of these sections inevitably ends up in the 'Zone of Death' ie, a jack of all trades and an expert in nothing. We've seen a lot of these 'Zone of Death' devices, they try to do everything and subsequently end up doing nothing particularly well. The iPhone will be an interesting experiment because one could argue it is setting itself up to be a candidate for the 'Zone of Death' as it tries to squeeze itself into more than one market segment. I think we are seeing more manufacturers specifically target one market segment, but will Apple's iPhone lure more manufacturers back into thinking they can 'do it all' with one device?

The iPhone is an attempt to create a phone + media entertainment device. It'll be interesting to see how the iPhone does in the market -- it was an obvious move to combine a communicator with a phone, but it's not as obvious that the entertainer is a natural match with a phone. The danger to Apple will be if users see iPhone as the worst of both worlds: a phone that lacks a good keypad and an iPod with very small memory.

For a really detailed look at the mobile/data market, I strongly encourage you to read Mike's entry The shape of the smartphone and mobile data markets, he's a brilliant guy and the post is laden with terrific insight, much more than I could highlight here.

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Snapshot of the Mobile Market

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