- SWOT analysis
Strengths:
The main strengths of UMTS capable handsets it their flexibility. Able to provide a comprehensive range of multimedia data services, 3G phones allow a user more flexibility and information than any other handset product available. Also due to international co-operation the handsets are designed to operate throughout Europe the Middle-east and the Americas. The Data services themselves are also great strengths of the product in that they allow the simultaneous transfer of text, video and audio information to a hand set or between two handsets.
Weaknesses:
The main weakness of the 3G handset is its cost and relative superficiality in the current UK markets. Some pessimistic voices have emerged, questioning the viability of 3G. The problem being that 3G services will require bandwidth (data transfer rates) the greatly exceed those already used by conventional mobile phones (2 and 2.5 G). This bandwidth will only be possible through huge initial investments in radio licences. As previously stated in the UK the rights to these resources have already been allocated at a total cost of £40 billion. Below I a table outlining in more detail the allocation of resources.
The telecom companies mentioned above all believe that due to the exclusivity of the strengths inherent in 3G technology they will be able to charge premium rates for their services to cover these huge investments. However there has been a great deal of speculation about these debts that threaten to cripple operators. Doubts have also been raised about the 3G business model. The truth is no one is sure weather the Customers will want this advancement in technology and thus if the operators will ever get out of this debt.
Opportunities:
Compared with further investment in GSM and GPRS (the bandwidths used to communicate current mobile phone signals) WCDMA technology as used for UMTS broadcasting is far more cost efficient with regard to the handling of future communication traffic growth. This future proofing technology it a great opportunity for 3G handsets in that its will allow the products potential market to grow significantly in the future, outliving usual product life cycle predictions as it keeps pace with more current technology. WCDMA has a potential 20-30% lower capital expenditure compared with GSM in its initial launch coverage phase. Mobile networks using WDCMA are therefore a cheap alternative to 2G as well as providing high capacity platform to enable voice and data revenues in the future.
At present the level of input from firms working along side operators such as Hutchinson 3G is gathering pace. Due to the level of consumer multimedia access 3G devices enable company’s direct marketing access to the consumer M-commerce as it has been labelled will eventually allow customer subscribing to a 3G service the opportunity to watch films and television direct from cinemas and broadcasters, it will also allow the public to buy and sell in the same way E-commerce has allowed internet subscribers to create virtual shops online. This new economic expansion is surely a positive opportunity for 3G operators to capitalise upon.
Threats:
Coverage and demand are two of the biggest factors threatening the success of 3Gs UK feasibility. As shown by the diagram below compared to integrated 2 and 2.5G systems 3G main USP, video streaming technology, is only available in a very limited region of the country.
This coupled with
an ambiguous initial
response in public
demand may lead to
rapidly falling sales and
thanks to this low
consumer coverage
a no win situation. 3g
operators will have to
implement quick plans to
expand current network
capabilities if the wish
compete with established 2G
brands. The demand threat
in itself is perhaps the most significant threat to 3G technology implementation. Many believe the with the onset of wireless internet capabilities direct for laptops using technology such as Intel’s Centrino wireless links, mean that despite its pocket size advantage the sheer power and flexibility of modern computing will always overshadow 3G handsets modest capabilities.
1.3 The Problem
Based on the information provided in the introduction and SWOT analysis concerning 3G technologies one can see that there are several risks and advantages apparent in the launch of this service, thus a problem is posed. Is it feasible to introduce 3G devices and their subsequent infrastructure into the UK telecommunications market?
2. Aims and Objectives
2.1 Primary objectives
To ascertain whether or not it is feasible to launch 3G telecommunication technology into the UK mobile telecom market at present.
2.2 Secondary objectives
- To research and ascertain whether or not there is a demand within the current UK mobile phone market for 3G technology, comparing research to foreign and international markets.
- To research and ascertain whether or not 3G technology is a financially viable investment for telecom operators at present, comparing it similar investments available.
- To research and predict the financial make up of the 3G launch utilising by forecasting the cost involved breakeven analysis and Ratio analysis of a major mobile phone retailer.
- To evaluate the previous three objectives and come to a conclusion as to whether 3G technology is feasible in the current UK marketplace or not.
3. Methodology
3.1 Data collection Methods
In order to carry out the four secondary objectives I have set to reach a conclusion with regard to my primary objective I have had to undergo extensive research into the mobile communications industry. This has involved the following:
Primary
- Public Questionnaire Sample
3.22 Revised public Questionnaire
- Public interviews with current mobile phone users
Secondary
3.31 Obtaining financial information for The Carphone warehouse Group PLC
3.32 Obtaining Hutchinson Whampoa Limited (Parent Company of Hutchinson 3G UK) Annual report regarding the start up of their 3G service as well as a telecoms operation overview report for 2002 and 2003
3.33 Extensive internet research into articles concerning 3G technology internationally.
3.34 News paper and Magazine articles from the Observer and Business Review
3.35 Recorded interview with MP Minister of State for Energy, E-commerce and postal services Stephen Timms.
3.2 Primary research
3.21 To gauge a number of different responses as to the marketing aspects 3G technologies direct from the potential consumers I created a public consumer orientated questionnaire. The questionnaire is nine questions long and includes both open and closed question types. Below are two examples of the questions
The questions within the questionnaire itself covered several topics in attempt to answer the secondary objectives I have set. The questions concerned themselves with the pricing, advantages, disadvantages, aesthetics and brand preference of the public’s current use of mobile phone services as well as their opinions on the strengths and weaknesses of the 3G technology.
It was possible to use a random sample when distributing the questionnaire in that as the mobile phone market is at present drawing towards saturation point (with over 70% of the UK population owning a mobile, according to a previous survey carried out by Henley management Centre and Teleconomy) one can be confident that many if not all of the interviewees are part of the potential target market 3G technology aims to target.
3.22 Thus I distributed 50 questionnaires among the public as a sample. Despite the solidity of the questionnaire itself a number of problems arouse with regard to myself when distributing the questionnaire. Firstly the human bias introduced by myself meant that the interviewees I managed to convince to take part in the research were overwhelmingly the same age as me and thus made the sample unrepresentative of the population in that the results would only reflect the 16-20 year old age bracket. This was unacceptable and so I reprinted an additional 25 questionnaires and posted them in the staff room at my school. The teacher population at Pates Grammar School is spread evenly between the ages groups detailed on my questionnaire as well being representative of a great number of different Teaching professions within one place. This I believe remedies the problem of weighted results and keeps the questionnaire as a viable research resource.
3.23 Also when out conducting the sample questionnaire I recorded several of the comments made by interviewees. This allowed a greater and more specific array of results in terms of what the public opinion is on 3G mobile phones out side of my own questionnaire thus allowing for more detailed reasons. These opinions can be found in the appendix.
3.3 Secondary Research
My secondary research was conducted to establish a more national base of results and points for analysis within my research as the primary research I have already conducted was only conducted in a specific area and thus could be criticised for not being representative of the national population.