Integration unleashes mobile phone conversion, finally
The objective of convergence is to combine two or more previously discrete technologies, with the end result ideally being improved features, benefits and value for the customer.
In the mobile market, this objective has not always been attained. The quality of photos taken on many camera phones has often been a far cry from that offered by dedicated devices. Mobile phone MP3 players have often suffered from compromised user interfaces and poor quality sound compared with their standalone peers. Demand for mobile phones converged with games-playing capability has remained niche.
Further, the cost of converged devices has often been at a premium to that of two separate products with equivalent functionality.
As a result, consumers seeking top-of-the-range performance had little alternative but to carry multiple devices.
But 2009 is likely to see a new range of mobile phones, which overcome the convergence compromise42.
Falling component prices43 and advances in miniaturization are likely to play a part. The economic downturn may also play a role in driving demand, as consumers seek a single device to deliver multiple applications. But the biggest driver is likely to be better integration with the extensive functionality available with today's mobile phones.
Camera phones boasting high-quality lenses and 12 mega-pixel sensors are expected to offer image quality that rivals the best point-and-shoot cameras44. A few may include features common only to expensive dedicated cameras, including near-zero shutter lag, smile recognition and 360-degree panoramic capabilities45.
But the most successful phones are likely to use the power of mobile connectivity to enhance the stills camera: using GPS to allow geo-tagging of images; high-speed broadband to post photos online, and email clients for sending photos to friends46.
The same will likely be true of music phones. A growing range of devices may have multi-gigabyte memory, dedicated music buttons and high-quality pre-amplifiers that rival standalone players47. And music and mobility will be more carefully fused. Music phones may incorporate mobile broadband to enable rapid downloading over-the-air; FM transmitters to play music in cars or on hi-fis, and WiFi connections to exchange music with PCs48.
Over and above their increasingly attractive technical specifications, demand for these products is likely to be driven by a combination of reduced consumer spending and the availability of subsidies from mobile operators. Though standalone cameras and music players are likely to remain inexpensive, they may struggle to compete with converged mobile devices offered nominally at no cost.
Consequently, sales of mobile camera phones during 2009 may exceed those of dedicated digital cameras, for the first time ever49. And by year-end, camera phones will likely outnumber all the conventional digital and analog cameras ever sold. Sales of music phones may be as much as three times higher than those of dedicated players50, and whereas MP3 functionality was rarely used in older phones, in 2009 models, usage may exceed 60 percent51.
The mobile phone may soon come to be regarded as the most successful converged product of all time.
Bottom line
Mobile handset manufacturers are getting better at convergence, but still need to proceed with care. They should not assume that the mere addition of more features guarantees success.
Rather, they should focus on deeper integration with the objective of enhancing products' practical benefits so as to justify any price premium. Manufacturers should work closely with mobile operators to ensure that converged functionality can be monetized. Operators are likely to be reluctant to subsidize features that offer no route to revenues.
Standalone device manufacturers should focus on enhancing the capabilities of their devices. Physical size, storage capacity and battery performance may be areas in which superiority over converged devices can be established.
Operators should study consumers' use of converged products in detail. Tools now exist that can monitor usage of all mobile phone functions, not just those that require a network connection. These could offer far greater detail on consumer behavior, and may help identify revenue opportunities relating to converged functionality.
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