As the IPhone Launch Nears, the Wireless Industry Needs a Clue

On the eve of the iPhone's June 29 arrival, wireless-industry insiders are scrambling to understand their customers before Apple takes them away. The trouble is, they can't seem to agree on the problem, let alone the solution.
For some, improved quality of service is the missing link.
"What do customers want? We have no idea," says Brian Finnerty, director of device development for wireless carrier Sprint Nextel. "As an industry, we're like robots -- we go toward the light and we pile up on it. But service is what customers want."
Finnerty was speaking at Brew 2007, a conference sponsored by Qualcomm and named after its mobile-phone platform.
For others, making phones friendlier to users is the critical piece of the puzzle.
"Customers want to do more with their phones and it isn't price that drives revenues, it's user experience," says John Harrobin, senior vice president of marketing and digital media for Verizon Wireless. "We've been successful despite the fact we're driving customers down a one-way street."
Americans already own about 240 million phones, says Chris Hazleton, senior analyst for mobile devices at IDC. U.S. consumers get new phones on average every two years or less. And they're not particularly loyal to carriers.
That doesn't bode well for the established players when Apple joins the lineup. Apple, along with partner AT&T Wireless, will throw its iPhone into the cellular mix Friday evening with the stated goal of selling a million units the first year. At $500 for a 4-GB model and $600 for the 8-GB version, the iPhone will be one of the most expensive handsets available.
Apple, which enjoys virulent customer loyalty because of its products' ease of use, has promised its phone will offer far more intuitive use, the ability to load applications from sources besides the carrier and snazzy touchscreen mechanics.
"It's several generations ahead of the market in terms of input and it will resist aging better than other phones," Hazleton says. "No phone has been as highly anticipated as this."
Just as Macs forced the evolution of Windows in PCs, the iPhone will probably force other cellular programmers to make their phones more intuitive, Hazleton says.
But for what uses and how is the nagging question.
Because so many people already have cell phones, carriers don't see much money in hunting for new subscribers. Instead, they hope that added revenue will come from getting customers to spend more time on the network and using data services. Less than half of cellphone subscribers use data services now.
Developers at Brew 2007 discussed applications that would drive data usage in a variety of ways, such as letting people do their banking by phone, manage airline miles or get concert tickets delivered as a barcode on the phone.
Partnerships between carriers and media companies are flourishing. And developers who say the gaming market is ripe are looking for ways to duplicate the success of wireless gaming communities in Japan and Korea.
But all those uses rely on the persistence and patience of customers willing to wrestle with their phones to get the applications running. And things that work on some phones don't work on others because of technology limitations.
In fact, customers' most common tech-support complaints are that they can't find the data they downloaded, or their phones either don't support the application or aren't configured to do what people want, a WDS Global survey found.
"We need to create a simple, uncluttered, intuitive way of getting these things to customers," says Harrobin. "But the technology and integration is harder than we expected."
Finnerty agrees that ease of use is important, but content also lags behind. "We need to find out how people want to use their phones and we need to make simpler, smarter ways to do that," he says. "We have the penetration, we have an abundance of applications, but the content isn't ripe."
"How many ringtones and horoscopes do we need?" he wonders.