Pioneers reap benefit of costly licences
Jun 22 2009 by Anthony Peart, The Journal
IT has taken quite some time to arrive, but the money spent on securing a UK 3G telecom licence by multinational organisations in the early months of this century is certainly beginning to bear fruit.
Many of the companies which were initially involved in the auction process have since lost their independence in one way or another.
The names include Hutchison Whampoa, which runs mobile phone group 3, Vodafone, BT Cellnet, which has become O2 and is now owned by Spain's Telefonica, Orange, which is part of France Telecom and One2One.
The corporate activity in the sector in the past decade in part reflects the importance of positioning for the future and ultimately the recognition that owning a 3G licence will be a benefit over the longer term. A staggering £22bn was raised by the UK 3G licence auction in 2000.
Moving forward to the world we live in today, there has been much anticipation and hype surrounding the launch of Apple's iPhone, the 3G S. The “S” stands for speed and represents another leap forward from Apple's first ground breaking iPhone, which was launched in the US in June 2007.
Technology has certainly moved on and we now live in the age of the smart phone, with many hand set makers from Nokia to Samsung keen to take a bite out of Apple's share of the market. At the moment, the momentum appears still to be with the iPhone, especially in the US and Europe where it has been a runaway success. The iPhone is a text book example of “first mover advantage”, which simply put is the success that is often achieved by a business by being the first to identify and enter a new market. In the case of Apple, the innovation was to combine the highly successful iPod with a phone, which seems logical, but also the insight to provide a platform that allows the customer to add applications to the iPhone has created a leading position.
The concept has allowed the iPhone to grow beyond the primary functions it was created to fulfil and it is almost surprising to learn that Apple has also been caught off guard by the appetite of customers for additional content.
Indeed, the market for iPhone applications is becoming very popular in itself. Part of Apple's business model has been to align itself with at least one mobile carrier in each market it has entered. In the UK, O2 was Apple's choice and as part of the deal the carrier obtained exclusivity. While the iPhone has been very successful in the West, the take up in emerging markets such as China, Russia and India has been slower than expected.
Investors will monitor sales closely as it is likely the emerging markets will provide the next stage of growth for Apple.
In China, negotiations are still ongoing to bring the iPhone to the market. However, there are a number of stumbling blocks that will need to be overcome before that can be achieved.
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