3'S X-Series shows the way forward for mobile services
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Conventional wisdom on the future of mobile operators has two important axioms. The first is that mobile voice-over-IP (VoIP) is a massive threat to the approximate 75% of revenue they earn from voice services. The second is that mobile instant messaging could cannibalise SMS revenues, which make up a large proportion of the remaining 25% of revenues attributed to data.
So there has been great interest in Hutchison 3G's release of X-Series this month (see Feature, page 30).
Quite right. This could be the first seismic shift within the industry since the launch of 3G. Bristling with new capabilities, X-Series is the Swiss army knife of mobile entertainment. In years to come, I hope it's seen as a landmark within the evolution of the mobile industry.
At the forefront of the capabilities of X-Series are clients for Skype and Windows Live Messenger. Heavens above, that's VoIP and IM in one handset - surely this can't be 3 committing commercial seppuku?
I don't think 3 created this offer without some careful arithmetic. Within higher value contracts, as X-Series is positioned, operators already offer minutes of cross- network calls in the hundreds. For those, they have to pay a termination fee with the network being called, slightly over 5p a minute. Calling web Skype users, there will be no such charge, so 3 will be better off if its customers spend their time calling Skype users rather than other mobile networks.
By offering Skype on a fairly high-value tariff, I think that 3 has negated the traditional worry, especially if this offer increases its monthly contract subscriber base. If Skype clients become more widespread on lower-end handsets so users can call each other without affecting their monthly call allocation, that may not be the case.
A similar case can be made for the inclusion of Windows Live Messenger. Text bundles are usually included within high-end contracts anyway, so I can't see that 3 will lose significant income.
One of the challenges for 3 has been to attract high-value customers. At the operator's launch in March 2003, the idea was that video calling and football highlights would lure high-spending early adopters. They were thin on the ground, but 3 gained significant market share through price competition, both on minutes offered with contracts and its pre-pay offer. Despite that, it has been successful at generating income from premium data services, most notably SeeMeTV and dual-download music.
What excites me about the potential for X-Series is that users will enjoy an all-you-can-eat data bundle. This is similar to T-Mobile's Web'n' walk, but in a pure 3G environment. Hopefully this more level playing field will lead them to consume rich-media services from D2C providers, as well as the operator portal.
Because X-Series is a high-end package, appealing to early-adopting personal users, those in the mobile entertainment space should give thought to how they can reach such customers. For example, large music storage capacities combined with PC access via Orb and 3G connectivity means side-loading services and mobile music downloads could be combined.
And if there has been a topic as hot as VoIP during 2006, it has to be mobile TV. While some TV services have been launched, they've been somewhat limited in terms of availability and choice of package, and have carried a premium price. So it will be interesting to see the impact of X-Series' tie-up with Slingbox, which allows customers to watch and control programmes from their home TV on their mobiles.
X-Series isn't a quantum leap. It's several.
Craig Barrack is the founder of Mobile Networking; craig@ mobilenetworking.co.uk
