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Monday, May 05, 2003

Early Adopters or 'Show-Offs'?

Hutchinson 3G is, it seems, having a hard time getting started in the UK. Initial sales are relatively low, and the roll-out is under- rather than over-performing. I am not at all clear that this is going to work. Certainly not any time soon. I am not in any position to comment on what is happening in other parts of Europe, but the boom here in Spain among adolescents is broadband internet and instant messaging, and I find it hard to see that anyone who has experienced video-conferencing over the web, with the mobile and fixed line phones as subordinated, secondary, lines of communication, is going to go crazy shelling out the quantities of cash needed to get into 3G today. The key questions are really related to cost and function. In the short term, the loss of Telecom momentum seems to mean a window of opportunity is gone, which is not to say that at some stage these products won't become widely used and relatively cheap. It's just that I don't think they will be anything like the killer app they were being sold as not so long ago, and in this environment the key problem could be in funding the web-phone enabled services to make them really interesting. The history of the DVD player may be more of an indicator of the kind of problem the technology can have, and in any event I think that talk of the 'early adopting' phenomenon is entirely out of place. It's like comparing the first consumers of digital TV with web-log pioneers, or linux communities: we're talking about apples and pears, or, if you prefer, rocket scientists and coach potatoes.

Hutchison 3G, the new entrant mobile operator seeking to gain market share by offering handsets capable of live video calls, has sold 20,000 units in the UK, suggesting it is attracting new users at the rate of just 200 a day.The figures will be watched by the mobile industry because Hutchison 3G is the first operator in Europe selling phones running on the latest third-generation technology. This allows u sers to download data to their mobile phones at speeds several times faster than existing 2G networks. Sales show the mobile operator, marketing itself under the brand "3", is capturing the imagination of some consumers with services such as video clips of football match highlights and news from broadcaster ITN. Analysts said early sales figures were mildly encouraging, given the limited number of handsets on sale. But they warned it looked increasingly unlikely that Hutchison would meet its target of attracting 1m customers in the UK by the end of the year. The phones are being sold at more than 1,000 outlets in the UK, including branches of Carphone Warehouse, Comet, Dixons and the Link.The operator's flagship video phone costs £200.

According to people at Hutchison 3G, the handset's most popular service is the live video call, with video calls accounting for almost half of all usage. Video calls, at 50p a minute, are one of its most expensive services. Average customer spending on the phones is also high. About two-thirds of customers have opted for one of two "all-inclusive" monthly tariffs at £60 and £100. By comparison, average customer spending on mobile phones in the UK is about £30. Having committed almost £8bn to its UK operations to fund the purchase of 3G licences and increase its network, analysts said Hutchison desperately needed to generate above-average re venues per customer.Ben Wood, analyst at Gartner, the technology research house said: "They've done well to get to 20,000 but they've got to question who these users are and whether they are just early adopters."
Source: Financial Times

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