Femtocell technology works. Costs are still high, needing mass market adoption to achieve the required price point. The business case for the operator looks good. But the industry is still trying to nail down the compelling reasons for the customer to buy it.
There have been a few related articles crossing my desk during the last week:
- Ovum's sober and somewhat conservative view on the state of the femtocell market. They reinforce a timescale of 2010 as the year of the femtocell.
- Technology is not better if it does not add value. The good product manager blog re-inforces that there must be clear value for the end customer, not just a bunch of interesting technical options.
- Product Focus, a specialist training business for IT and Telecoms product managers, posted out their journal this month with a focus on developing good market propositions*. It highlighted the iPod, where the mainstream industry was focussing on number of music formats and battery life. Instead, Apple concentrated on usability and size (thinness), which met market requirements more appropriately, leapfrogging their competitors to dominate market share.
*For our North American readers, propositions are not just somthing you find in whore houses and related businesses, but are the compelling customer offer providing extra value to meet a need. In the formal definition of marketing from the UK Chartered Institute of Marketing - ..." The management process responsible for identifying, anticipating and satisfying customer requirements profitably."
I can't say it better than quoting from the good product manager blog
Whenever someone proposes a technological improvement that they contend is “better,” product managers need to probe further to understand what makes it better. Why is it superior? How will customers benefit? What are the criteria which customers value, and how will this impact those criteria? Will it improve one criteria at the expense of another? Does this tradeoff add or remove value from the product? By going through this exercise, rather than just accepting the assertion that it is “better,” a product manager can ensure that technological changes are adding value to the product and improving it in the mind of the customer.
I am reminded of the Iridium global satellite system, which was an absolutely amazing technological achievement. I have tremendous respect for the engineers involved. Calls were not just handed over between handsets and satellites as they orbited the earth, but also between satellites so that the call would reach the best downlink station. It was a technology marvel, but it failed commercially partly due to almost complete lack of marketing (sales were distriibuted via regional mobile operators using their standard sales channels) and because the need that it met (providing calls anywhere in the world) was satisfied using cheap, terrestial mobile networks.
Femtocell industry insiders tell me that operators and some vendors continue to struggle with the compelling offer to the customer. Part of the reason is that the market is a moving target. Poor coverage is less of an issue (in Europe at least), and many mobile contracts already include inclusive bundled minutes so that the offer of cheap calls is less enticing.
We've identified three or four specific business cases which are described elsewhere on this site.
- Poor coverage
- High speed data performance
- Connected Home
- Enterprise including SME/SOHO businesses
The UMA/WiFi industry is arguably a couple of years further ahead than femtocells, with several commercially available services around the world. The industry highlights that technical benefits alone are not enough. We can expect to see features and capabilities beyond the simple poor coverage in the near future. 3G UMA phones are achieving 1Mbit/s over UMA, which is more than enough for services on small displays of that size. We can expect to see the UMA operators provide the same type of services to address these business cases as femtocells are targetting, with Mobile TV and closer integration to the connected home in the near future. This will help pave the way and prove out what the customer demand is for them.