Smartphones may break operator-dominated

Since Apple's iPhone broke into the telecommunications industry on June 29, 2007, more than three years later, the ensuing "iPhones" have opened an era when smartphones have dominated the world. With the announcement of the latest round of international telecom operators' financial reports, the amazing energy of smart phones has once again been placed under the spotlight. A group of data reflects objectively and truly, and smart phones have already taken on the task of generating revenue for operators. And this seems to the operator to be more afraid of surprises. In the past two to three years, the growing reliance on smartphones has caused operators to lose their initiative. Apple recently expressed its strong interest in the built-in SIM card. For a time, operators who have not yet had time to cultivate their own power have become more and more troubled. On the one hand, the surface is beautiful, and on the other, there are endless fears. The operator seems to have literally learned an artistic conception of the Chinese saying: “I know what I am worried about, and I don’t know who I am.”

Prosperous appearance - smartphone energy is amazing recently, international large operators have announced the third quarter earnings. The figures show that although the revenue from the fixed-line business is still weak, smartphones have become the largest earning point for operators, and they have become a pillar-oriented business.

The United States is the first place for the iPhone to set foot, and it is also the most obvious place for smart phones today. AT&T has exclusive rights to the iPhone in the United States and is therefore particularly attractive. The number of iPhones activated by the company in the third quarter has set a new record, reaching 5.2 million, which is 62% higher than the historical record created in the same period last year. Of these, one-quarter of iPhone buyers are new users. The total number of mobile subscribers added by AT&T during the quarter was 2.6 million. In the same period, the company’s quarterly profit climbed to US$ 12.34 billion, compared with only US$ 3.19 billion in the same period last year. The difference between the iPhone and the U.S. carrier Verizon has been fully reflected. In fact, Verizon, although it was smaller than AT&T before the smart phone had a large-scale epidemic, was keeping a close distance with AT&T. The gap was not obvious. However, in the third quarter of this year, due to the impact of the hot iPhone, the number of new mobile users has dropped by more than half compared to the same period of last year, with only 997,000 people. This is the first time that the number of new mobile users in the quarter has fallen below 1 million in the past seven years. This is also one of the direct reasons why the company’s quarterly profit plummeted by 25%.

In Europe, as smartphones are increasingly favored by users, the income of mobile operators of all major operators has maintained a steady growth. Analyst Citi's statistics show that mobile operators in other European markets have performed satisfactorily, with the exception of operators in Austria, Italy, and Spain that have increased their competitive costs as a result of marketing expenses and thus slowed down their revenue. Driven by the popularity of the iPhone and its business, Deutsche Telekom's mobile business is gratifying, but its US companies are also underperforming because of the lack of smart phone cooperation channels such as the iPhone.

The sales of “iPhones” have brought great rewards to operators, and at the same time, they have brought operators an invisible “curse”. The pressure for suffering has been increasing.

In Japan, the performance of the three mobile giants has improved due to the iPhone. The net profit of Softbank and NTT Do-CoMo has achieved double-digit growth. Softbank is the exclusive iPhone agency operator in the Japanese market. The company’s net profit in the third quarter reached 57.4 billion yen, a year-on-year increase of up to 32%, which is the highest quarterly profit figure in the company's history. While NTT DoCoMo, Japan’s largest mobile operator, did not cooperate with i-Phone, the company also took the smart phone this way. DoCoMo launched its Xperia smartphone in cooperation with Sony Ericsson in April this year, using Google’s operating system. The company also recently released Samsung’s Galaxy phone. According to figures, DoCoMo's net profit in the third quarter also increased by 22% year-on-year to 166.7 billion yen, partly because the company also implemented cost-cutting measures simultaneously, but DoCoMo president Yasuda Yamada emphasized that it was strengthened. The company’s leading position in the field of smartphones is the most important task of the moment. In contrast, although KDDI, Japan's second-largest mobile operator, saw a slight increase in net profit in the third quarter, the company has also been actively promoting the use of smart phones in the network.

The hidden trouble behind this is that operators are sincerely fearing that the excellent performance of smartphones will delight operators, on the one hand, and operators will become more and more fearful on the other. The emergence of smart phones has broken the traditional model of operator-led industry chains. Although only three years have passed, the feeling that one dominant right is held by others is growing stronger in the minds of operators. As a result, more and more operators began to take precautions while gaining profits. On the one hand, they must guard against the “iPhones” from suddenly changing their faces. On the other hand, they are also building their own smart phones as soon as possible.

Although the number of users has rapidly increased due to smart phones, the cooperation between operators and smart phone manufacturers does not look so beautiful, and operators have to pay a very considerable cost. Take AT&T as an example, in order to obtain the exclusive agency right of i-Phone, the company pays a high subsidy to Apple every time it gets an iPhone user. For this reason, although AT&T looks very attractive on the number of users, industry analysts say that the company's short-term profits will be greatly affected. What is even more rigorous is that with the changes in the policies of various countries, operators who have paid a high price to obtain exclusive iPhone rights may lose their exclusive advantages in the future. It is said that next year, the iPhone operator in the United States will add Verizon Wireless.

Concerns about the loss of exclusive agency rights have not subsided. Recently, Apple’s position has made operators feel highly nervous. Previously, Apple had revealed that it wanted to use the built-in SIM card to kick out operators such as Vodafone and O2 out of the sales process in order to establish direct contact with consumers. The built-in SIM card allows users to directly purchase mobile phones without signing long-term contracts with operators. This time the statement has caused strong opposition from European operators, they warned Apple will stop the subsidies to the iPhone. Currently, as long as the user signs a 24-month contract with the operator, the iPhone will be available for free, and the operator will fully subsidize the cost of the mobile phone. If subsidies stop, iPhone sales will be greatly affected.

The built-in SIM card incident undoubtedly reflects the operator's fear of losing the iPhone. It is precisely because of concern that this situation has arisen. Today, more and more operators are beginning to accelerate the development of their own smartphone power. In this regard, the Japanese mobile giant NTT DoCoMo, which once created i-mode myths, seems to be at the top.

In the 3G era, DoCoMo's i-mode created the myth of mobile applications. Just a few days ago, the company announced that it will be porting i-mode to smartphones in December. DoCoMo will launch an i-mode application store. Previously there was a view that smart phones will fully replace existing mobile phones in 2014, and DoCoMo president Yasuda Yamada believes that this phenomenon may appear in Japan in 2013, which is also not a deterrent for mobile operators. Great business opportunities, but he pointed out that if operators want to get more profits through smart phones, they must carefully think about how to deal with the smart phone industry. Yamada Takahashi believes that innovative services are the strengths of operators. For this reason, the company plans to provide unique and innovative services. The first is to port the most popular hotspot services on the i-mode platform to smartphones. The company launched an app store called "DoCoMoMarket" in April this year. The store has a total of 500 content sites, covering the most popular applications such as news, video, and games. DoCoMo plans to increase the number of sites to 700 by March next year. In addition, the company has always emphasized that mobile payment is the company's core business, for which the company will soon launch two smartphones with built-in electronic wallet functionality.