Almost everyone in the civilized world has a cellular phone. Well, I take that back, even terrorists in the remotest part of the world have some form of mobile communication tools. So, this morning I did not spill my coffee in bewildement when I read the report from iSuppli (via TG Daily).
The Mobile Communications industry worldwide have enjoyed dizzying growth for the better half of the last decade. Thanks to innovation in communication technologies, cellular phones have evolved from being a business tool to an indispensable social fabric that holds families, soceities, businesses, and governments together.
With economies of scale and clever Marketing Strategies (e.g. phone subsidies in exchange for long-term contracts), cellular phones became more and more accessible to the average person. The phenomenon continued until the market reaches saturation point.
With the U.S. and Europe at 65% and 80% market saturation, iSuppli predicts that the total revenue for cellular phone manufacturers will decline 4.7% this year, down from $115.1 billion in 2005. At such a point, the market can only sustain itself by having existing subscribers replacing their cellular phones/devices; signing up for extra lines [for friends or family members]; or subscribing to other value-added services (e.g. multimedia messaging, Ringtone/Music/Video downloads, Live TV on the phone).
Another strategy would be to move aggressively into "Emerging Markets" (e.g. China, India, and the African continent), but even those markets are rapidly bloating.
This is where the mobile communication industry can steal a page from the computer industry game book: Forced Obsolescence. When was the last time you were "forced" to buy a new PC because the old one could not run a new software application? Compare that to the last time when you "DESPERATELY" need to change your perfectly functioning cellular phone because someone could not call you. It has never happened, hasn't it? And is there any reason that you "POSITIVELY" and "ABSOLUTELY" need to change your cellular phone because you want to watch NFL games on that tiny screen? I think not.
Don't get me wrong, I am not a paid lobbyist for the already cash rich phone companies. And the last thing I want is for them to act like INTEL and Micro$oft. To get out of this minor slump, the mobile communication industry needs to be more creative in serving their subscribers than merely providing a communication pathway. Cellular Providers can form partnerships with Content Providers (e.g. SBC and DirecTV) to cross promote their products and services. Cellular Phone Manufacturers can diversify their product portfolio (e.g. Motorola and Apple came up the ROKR, a cellular phone-iPod hybrid) or reinvent themselves into more robust Electronic Companies (e.g. moving into the digital entertainment domain).
When TV was invented, all the Hollywood studios were worried that no one would go to the "picture shows" anymore. A creative Hollywood Executive (I can't remember who exactly) said to his distressed employees and shareholders, "We are not in the movie business. We are in the ENTERTAINMENT business." This is not an exact quote, but you get the idea.
Read: "Growth of mobile phone shipments slows, revenues decline - iSuppli"
By YC from the Technocrat Soapbox - Guest Blogger
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