The New Wireless Wave: Prices Falling, Cloud Rising
Feb 6, 2014 5:00 AM PT
I get a kick out of reading the media coverage of news events in the wireless sector. Sometimes reporters understand what is happening -- sometimes they don't. AT&T Mobility just reduced the price of its Mobile Share Value Plan. Many wrote about it, but few really understood the issues involved.
This is more about a broad industry shift than a single company's strategy. Every five to 10 years, there is a major transformation in the wireless industry. The last major change occurred around six or seven years ago when Apple unveiled the iPhone and Google launched the Android operating system. They changed the smartphone sector -- and in fact, the entire wireless industry.
Now after several years and much heated competition, almost everyone who wants a smartphone has a smartphone. So what comes next?
The wireless industry is shifting once again. It started a couple of years ago and now is picking up steam. It's not being driven by any one company. Rather, as always, it is a natural reaction to a changing environment.
AT&T Leads the Way
Price is one thing that is changing. As technologies age, prices come down -- and that is what is happening in wireless. Both smartphones and monthly plans are more affordable.
Yesterday customers were interested primarily in postpaid plans, but now they're increasingly attracted to prepaid options for a number of reasons, not the least of which is to save money.
T-Mobile was struggling until the last few quarters, so it decided to change things up. It dropped the contract model and ramped up its prepaid offerings. This strategy seems to be successful, as it's now in a long-awaited growth cycle. It is still No. 4 among U.S. carriers, but it is attracting a lot of attention.
The top three -- Verizon, AT&T and Sprint -- are increasingly courting the prepaid market as well. Walk into any of their stores and you will see plenty of postpaid and prepaid choices. This is all good. The marketplace wants something different.
Typically the two largest carriers, Verizon and AT&T, charge the most. Smaller competitors including Sprint and T-Mobile must charge less to be competitive.
Smaller companies are often the ones to initiate sweeping market changes, but it's the top guns that have the greatest impact.
AT&T senses the industry is ready to change, and it cut the prices of its Mobile Share Value Plan in response to those signals. I expect Verizon and others eventually will follow. They always do.
This shift is a win-win for customers and for the companies.
Everyone Goes to the Cloud
The transition to the cloud is another big change for the wireless space.
Apple has its iCloud. It encourages customers to sync all of their devices -- iPhone, iPad, Mac -- and save all of their information in the iCloud rather than on their hardware. That way they can easily access their information no matter what device they happen to be using.
The cloud is the next big revolution in wireless.
Google is making it easy for Android users to store their data in the cloud. Samsung offers cloud services for its customers as well.
Microsoft is heading in the same direction. It's in the process of acquiring Nokia and eventually wants to connect its Lumia line of smartphones with Surface tablets and other devices running versions of the Windows OS. Users of any of these products can store their information in Microsoft's cloud.
More and more companies are jumping into this space.
Lenovo last week said it wanted to acquire Motorola Mobility from Google. It wants to have a brand-name wireless phone to offer alongside its laptops, tablets and smartphones. Lenovo wants its users to store their stuff in the cloud as well.
The cloud is also available through carriers like AT&T Mobility, Verizon Wireless and Sprint.
Further, there are plenty of third-party cloud services customers can sign up for -- or you can store your information in your own company's cloud.
The cloud is not going to attract every wireless player. Verizon and AT&T will offer a wide variety of services for customers to pool together, but smaller carriers like Sprint and T-Mobile likely will limit their offerings.
However you look at it, wireless is changing. Prices are coming down, bundles are being promoted, and the cloud is conecting devices and information.
Carriers love this, because a customer who uses multiple devices and services under one account is less likely to switch to a competitor.
The future looks very good both for consumers and business customers.
There's more, of course, but you get the point. The wireless industry is going through another transformation, just like it does every five to 10 years. Last time it was the smartphone revolution. This time it's about prices coming down and data from multiple devices going to the cloud.
AT&T jumps on industry changes more quickly than either Verizon or Sprint. That does not mean it will have the edge forever, though -- just for a while, until everyone else decides to get on board. This does give AT&T a first mover advantage, though, which the company seems to like.
Going forward, expect more focus on the cloud, on reduced pricing, and on bundling services into one account. These approaches are good for both customers and companies. This is a good wave of wireless industry change.