THINK ABOUT IT: Convergence opening new paths to market

THINK ABOUT IT: Convergence opening new paths to market

The forces of convergence are weaving interesting paths through the mobile telephony sector. As mobile data continues its inexorable shift from marketing hype to revenue-generating reality, affected companies are repositioning themselves to take a stake in this rapidly morphing market.

For the mobile handset makers, adaptation is essential for survival. Their traditional sales model would see these companies working with telecommunications carriers to create package deals of handsets and call plans, which would then be sold through carrier-owner retailers or third parties such as Crazy John's.

Now the carriers are facing declining growth in traditional voice services, and are keen to build data revenue from their enterprise customers.

But after years of concentrating on selling voices services to these customers, they lack the enterprise sales forces capable of closing these deals. Nowhere has been clearer than in Telstra's acquisition earlier this year of the technology service provider Kaz Computing, in an attempt to grow revenue beyond its traditional voice business.

What this means for the handset makers is that long-term success is going to require more than just stylish design - they will have to work harder to deliver value to the carriers, who remain vital for sales of their consumer products. The handset maker that can best generate data revenues for their carrier client is also most likely to be favoured in promotions and package deals.

For mobile handset maker, Nokia, changing market conditions have required a fundamental shift from its model, based primarily on selling phones through retail shops, to one that incorporates a two-tiered channel model with distribution and systems integration partners.

Nokia's director of sales and marketing for enterprise solutions, Bob Brace, said his company had spent the past few years building a reseller program that numbers more than 2000 members globally, backed by an industrial strength support program that mirrors that of Cisco and 3Com.

That a company such as Nokia, which has been traditionally aligned to telecommunications carriers and mobile voice services, should describe itself in terms of data network technology companies like these is a telling sign of industry changes.

Nokia has long operated a corporate sales team for handling sales of its backend mobile network technology to carriers.

But now it must also be able to prime deals that include packaged solutions of handsets and third-party mobile enterprise applications, with partners that include Siebel Systems, Oracle and IBM.

Missing from its list of close partners, however, is Microsoft - that company's desire to gain a dominant position in the market for mobile operating systems puts it directly at odds with Nokia's favoured Symbian operating system.

The next few years will see the formation of numerous alliances and acquisitions that would not have appeared probable only a year ago, as traditional telecommunications suppliers get closer and closer to their counterparts in the information technology integration sector.

Software developers will find new opportunities writing applications for handset makers, while systems integrators will find benefit from increasing their mobile skills to service deals primed by both handset makers and the carriers.

As Nokia's model evolves, it will be essential that the company balance conflict between traditional carriers, who remain a primary point of distribution for its mobile handset business, and its new systems integration partners. The distinction between a company working in the wired sector and wireless sector is rapidly disappearing. As the market contracts, consolidation is certain but the winners are far from clear.

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