Vodafone issued a stern warning to the world’s mobile operators today, saying that they had to improve dramatically the experience of using the internet on phones or risk losing out to the likes of Google and Facebook.
Arun Sarin, the chief executive of Vodafone, said that devices such as the Apple iPhone had changed people’s expectations of using the internet on a phone, and that operators had to “raise their game” to avoid becoming irrelevant in the race to secure vital new revenues from services such as music and video downloads on phones.
Mr Sarin suggested that there was no great competition to provide internet services on mobiles, particularly from the likes of Google, whose Android platform is scheduled for release this year, and that if operators did not improve their offering, they risked becoming mere “bit pipes” through which other players would gain access to customers.
“Our industry is going to be defined by who succeeds in the mobile internet world,” Mr Sarin told an audience in Barcelona.
“Operators have to invest in bringing mobile internet services to life. Do not allow yourselves to sit back. If you get it wrong the upside [to the mobile internet] will be enormous, but it will not be realised by us.”
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He said that demand for internet services on mobiles would grow rapidly — in Europe revenue from data services had already increased by 40 per cent on a base of £2 billion in the past year, he said — and that carriers were well placed to take advantage because they knew so much about their customers, meaning that they could help to target advertisements more effectively.
“We have a lot of info on our customers — more than internet companies do,” he said.
“We know if they’re male or female, where they live, at what times of day they talk. This means that [internet adverts] can become an important source of revenue for us.”
Advertising is expected to make up a large portion of the revenue associated with internet-based services on mobile phones.
Mr Sarin’s remarks about the importance of the mobile internet were echoed by other industry leaders who spoke on the opening day of Mobile World Congress, the world’s largest mobile phone conference, in Barcelona.
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Olli-Pekka Kallasvuo, the president and chief executive of Nokia, the world’s largest handset maker, said: “The mobile internet is the next global computing platform. The internet is going to be far more open and accessible globally.”
Mr Kallasvuo said that in the developing world, which operators and device manufacturers alike are increasingly focusing on as more developed markets mature, many customers would experience the internet for the first time on a mobile device.
Wang Jiangzhou, the chief executive of China Mobile, the world’s largest operator by market capitalisation, with a value of $300 billion (£153 billion), said: “Mobile internet convergence gives us opportunities and challenges, but the main challenge is the business model.”
Mr Wang said that of China Mobile’s 370 million subscribers, 100 million were now browsing the internet on their phones and that the company was aggressively pursuing new revenue opportunities from mobile music, gaming and other services.
China Mobile was adding more than five million customers a month, many in remote areas who have not previously had access to the internet, Mr Wang said.
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Operators and handset makers have responded differently to the challenge of improving the experience of using the internet on mobiles.
Nokia, which controls 40 per cent of the handset market, plans to “go it alone” by offering a full suite of internet services, such as gaming and music via its yet-to-be-launched Ovi platform.
Other manufacturers, such as HTC and the struggling Motorola, as well as some operators, such as T-Mobile, have kept their options open by throwing their weight behind Android, the Google-backed mobile operating system that is scheduled to appear on phones in the second half of the year.
Android is an open-source operating system that allows third-party developers to write internet-based applications for phones similar to those that have become popular on the social networking site Facebook.
Owners of phones that run Android can, in turn, download applications they like and customise their devices accordingly.