The Economist has an excellent feature addressing the mobile industry in Southeast Asia primarily focusing on the saturation of voice revenue and, therefore, the need for operators to promote mobile data and other value-added service to generate new income and growth in the market.
From the article:
Price wars in nearly-saturated markets have mangled profit margins. One answer is to prod customers to use data services, such as e-mail, web-browsing and access to a variety of “applications”—all of which could, some analysts think, spur new growth.
Yet this new growth will not come easy. Mobile-phone firms have shown they can make profits from the poor. But can they persuade them to upgrade to smart-phones or cough up money for data services?
This sounds like a stretch in Indonesia, where subscribers spend only $5 a month on mobile-phone services, one-tenth of the American average. That said, there are plenty of smart-phone users in Jakarta and Bali. Thailand has also seen a boom in these computer-like devices, despite a political upheaval that has repeatedly delayed the auction of licences for third-generation (3G) wireless networks, which allow for higher data speeds.
Elsewhere, operators are wary of investing too much in 3G networks. Most mobile users in South-East Asia are pre-paid customers who shop around for bargains. In the Philippines, juggling multiple SIM cards is common: users switch between them to take advantage of cheaper in-network calls or price promotions. This makes it hard for operators to build brand loyalty, let alone sell premium services.
It continues to address the role of handsets, and particularly smartphones in the region:
In Indonesia and Thailand, most calls involve people actually talking to each other. Yet these markets will eventually pass an “inflection point” where data services outstrip other revenue growth, predicts Sachin Gupta of Nomura Securities, an investment bank. Younger markets may move faster: Cambodia, Laos and Vietnam already have 3G networks up and running.
Cheaper handsets should speed this process. The same happened with standard mobile phones, whose prices dropped sharply, particularly after they were unbundled from operator contracts. Another attraction will be smart-phone applications, such as Facebook. The world’s largest social network is becoming increasingly popular in Indonesia and the Philippines. Finally, smart-phones could become a substitute for broadband access at home, which still is not widespread in South-East Asia.
Mobile data, and specifically mobile internet, in Southeast Asia is a topic often covered by this blog.
Last month analyst firm Frost & Sullivan predicted that mobile data in the region will grow 75% over the next three years.
For me, handsets, and handset prices, are the single most important factor as it is almost a given that operators, and market competition, will generate attractive data prices. Handsets are where the battle is won or lost.
Not only must they be affordable but they should support multimedia capabilities and provide a decent internet experience. After all, with mobile internet tipped to be the primary access point for the majority in Southeast Asia, and Asia as a whole, a poor and limited user experience will limit data usage, and thus ARPU and the grow of data services.
While the likes of the iPhone are unlikely to be found nation-wide in emerging markets like Thailand, low cost 3G/mobile data-centric smartphones (cheaper even than the four I profiled for CNN Go) will be responsible for serving, and to a lesser extent generating, mass market interest in mobile data and mobile internet.