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July 15, 2010

The sheer buoyancy and flexibility of the Web is leading to some interesting developments in the wireless industry today as to how mobile users perceive and use their iPhones, BlackBerrys and MIDs (mobile Internet devices), and in particular, their smartphones.

The avalanche of data communications and content accessed by and sent from mobile devices is mind boggling. Today’s tech-savvy consumers are creating a whole new world of online communications: text messaging, blogging, podcasting and networking on sites like Facebook, LinkedIn and Twitter.

Meanwhile, wireless users are starting to utilize the mobile Web to download content of all kinds, from large music files to graphics to photographs and to streaming video. The result of this massive change in mobile user behavior is that an increasingly large part of mobile Internet usage is for non-voice communications.

Do you think that VoIP experts predicted this would have happened just 4 to 5 years ago? Think again...

This new and rapidly growing trend in mobile data adoption is also escalating fast, accelerated in part by a new generation of powerful and popular smartphones. Those devices are loosely defined as MIDs that offer more advanced computing ability and connectivity than a basic feature phone.

Smartphones allow the user to install and run advanced apps, based on a specific operating system, such as Google’s Android OS or Apple's iOS.

Just like computers, smartphones run complete operating systems, providing huge opportunities for mobile app developers to offer services and features that enhance the overall user experience.

The popularity of these devices has been growing substantially over the last three years, since the first-generation Apple iPhone was launched in July 2007. The iPhone was ground breaking in that the ease-of-use experience and flexibility to download and view specific service applications was far superior to any other device offered at the time.

The iPhone was even the fastest selling model over that time period and now accounts for about 26 percent of the total U.S. smartphone segment. A huge number in deed.

In an economic environment that promises even greater challenges for device vendors, wireless carriers and the companies that rely on their growth, the smartphone market is getting even more competitive this year.

Consumer spending has been rather sluggish compared to historical levels, while mobile service operators are continually reviewing how subsidies are applied to their new phones, how various migrations to open platforms will be supported and how to maximize their returns on their investments through reductions in their mobile handset portfolios and vendor relationships.

The overall impact of all of this is especially challenging among mobile service retailers as the need to differentiate themselves and their products will be greater than ever, and servicing smartphone customers will be a top priority for them.

The J.D. Power & Associates 2010 Wireless Retail CSI report – Volume 1, finds that overall satisfaction with the retail experience among smartphone owners averages about eleven index points higher (on a 1,000-point scale) than that of traditional wireless handset owners (727 vs. 716), and this despite the fact that smartphones require additional service plan options, need more complex configurations and are more difficult to use for most people.

Smartphone owners are more satisfied than traditional mobile handset owners in all factors, particularly with regard to the sales staff, according to J.D. Power.

A part of this data usage increase is as a direct result of the improvement of the wireless network platforms that carry the data and voice connections, particularly the evolution of 3G and now 4G technology that promises to increase both the speed at which data can be transferred and the amount of information that can be handled per cell site.

And the same goes for LTE technology which also has an exciting short and long-term future in the mobile Internet segment.

The overall increase in smartphone sales will have a long-term impact on how wireless carriers address their customers’ specific needs, whether they be for business or personal use. Smartphone devices do require retailers to adapt by constantly training sales staff to keep pace with new features and offerings, but carrying out simple tasks, such as explaining the phone’s operation, provides salespeople with a great opportunity to optimize the customer’s wireless experience and foster greater loyalty to both the wireless carrier and store.

At the same time, it also gives salespeople great upsell opportunities.

As the smartphone category has expanded to include new MID offerings and user experiences such as Android and Research In Motion’s first touchscreen Blackberry devices, consumers’ mobile usage habits have changed as more mobile services and apps become available in the near future.

J.D. Power & Associates also finds that both smartphone and traditional cell phone owners are increasingly using their units for entertainment and sharing content and photos with friends, family and members of their social networks or business associates.

Among traditional mobile handset owners, about 24 percent of users indicated that they frequently send and receive multimedia and picture messages, an increase of more than 21 percent from January 2010.

Smartphone users are also twice as likely to share multimedia messages. Additionally, about 18 percent of all smartphone owners with touchscreen-equipped mobile handsets indicated they frequently download and watch video content on their devices, which is significantly higher than the segment average.

But the investments needed to support the increase in sales of smartphones, especially when problems occur, will need to rise to match higher customer expectations. The Wireless Retail CSI study shows that owners of smartphones are almost 28 percent more likely to visit their wireless carrier’s retail facility to inquire about a problem with their phone than are those with traditional handsets.

J.D. Power also says that smartphone users are also about 19 percent more likely to inquire about having their smartphone repaired, compared with owners of traditional mobile phones. This means that as sales of smartphones grow, retailers must be prepared to have more consumers visiting their stores to resolve problems or obtain repairs.

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Source: J.D. Power & Associates.