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Big differences between Finnish Android smartphone and iPhone owners

Alekstra has studied the behavior of Finnish Android smartphone and iPhone owners and the results are rather interesting. In November 2012, Android owners consumed 2.07 GB of mobile data – nearly twice the 1.05 GB that iPhone owners consumed.  There are several possible reasons for the discrepancy. Android users tend to be younger than iPhone users, so they may use their smartphones more often outside home WiFi access and could be heavier users of video-streaming applications. Operator pricing of monthly packages offered to Android smartphones often differ from iPhone packages and this could be another important factor.

The mobile voice and SMS consumption presents a mirror image – Android smartphone owners have notably lower usage rates than iPhone owners. It is possible that Android owners use cross-platform messaging and video-sharing applications that undermine both voice calls and text-messaging. The iPhone owner SMS consumption is dropping at a rapid rate, though; from 90 messages per month at the beginning of 2012 to below 70 messages a month at the end of the year. The Android smartphone owners have already gone down to 50 SMS per month level, far below where feature phone average SMS consumption level was in Finland a few years ago.

The statistics were compiled from randomly selected group of more than 1’000 Ratemizer application users on Android and iPhone platforms. Ratemizer helps smartphone owners to lower their mobile bills by analyzing their voice, data and SMS consumption patterns. The application is now available on both Google Play and iTunes.

Ratemizer Thrives on App Charts of USA and Finland

Last week, Ratemizer climbed to Number 9 on the US iPhone Finance app chart – and this week, the application returned to Number 1 position in the iPhone Finance category in Finland. The success of the application has led to recent media coverage by Reuters, New York Times and CNBC. The Guardian newspaper picked Ratemizer as one of its Top 20 iPhone apps of the last week of November.

The average annual savings potential found by both American and Finnish consumers has topped $200 among the first wave of application users. Ratemizer remains a unique application in that it evaluates the actual mobile usage behavior of its user – building a profile of voice, SMS and data consumption based on 12 months of billing data. This profile then enables Ratemizer to find the best possible mobile plan for this individual consumption pattern. By using Ratemizer, consumers can discover the cheapest possible plan that fits their personal profile for each major operator – this makes the process of evaluating the choice of carriers and plans much easier.

Alekstra Helps Rovio to Manage Mobile Telephony Services Globally

Rovio signed up as an Alekstra client in July 2012 and began using the Intelligent Phone Bill service. This involves Alekstra analyzing mobile data, voice and SMS volumes and then choosing the best possible combination that fits Rovio’s rapidly evolving needs. Catching invoicing errors and monitoring the largest spenders are part of the Intelligent Phone Bill package. Alekstra also provides Rovio a web portal that enables key managers to monitor changing billing trends on a monthly basis.

Savings resulting from the first round of optimization are 10-15% of the domestic mobile data usage – and 40% of the SMS unit price. Rovio’s decision to move mobile billing management to Alekstra is freeing up an estimated two days of management time per month. Rapidly growing companies face unique challenges in managing their mobile telephony services. Mobile voice, minute and data needs change quickly on the domestic level – but in addition, there are further complications in juggling the various roaming services in Europe, North America and Asia. Alekstra’s deep knowledge of operator billing policies in countries including Canada, United States, Germany, UK, Russia, Hong Kong,  China etc. helps growing companies to manage their global expansion in the most cost-effective manner.

The first day of Ratemizer

Alekstra launched a new consumer application, Ratemizer, on September 26. The application helps consumers to find out how much they could save if they switched to the cheapest mobile plan that fits their precise usage profile.

Ratemizer is available in the Finnish AppStore. During its first day on the app market, Ratemizer identified substantial savings – the Top Three cases resulted in more than 800 euros of annual savings each.

A few interesting points emerge from the early users. First – typically, substantial savings can be achieved by switching to the optimal plan of any of the four mobile operators covered by Ratemizer. In one case, a consumer could have achieved savings in the range of 1’020 to 1’230 by switching to the best possible plan of Saunalahti, TeleFinland, DNA or Sonera. Only one of these operators had the plan that yielded more than 1’200 of annual savings – but all four had a plan that would have yielded savings of at least 1’020 euros.

Typically, the consumer does not need to change carriers to reap most of the saving benefit that phone plan optimization yields – chances are that the current carrier has a decent option.

Another interesting point is that many of the consumers who have more than 300 euros of savings potential tend to underestimate their annual voice minute peak. Many consumers worry about mobile data usage or SMS volume – but the most typical way big spenders overpay in Finland is by underestimating how much they talk on the mobile phone during 1 to 3 peak months of the year. In many cases the voice minutes stay under 1’200 per month for most of the year – but spike above 1’500 or even 2’000 a few times a year. Those spikes can end up adding hundreds of euros to the annual mobile bill.

iPhone 5 debut in Europe may trigger new price competition

The eagerly awaited iPhone 5 is debuting in Europe at a fascinating juncture. In markets like France, major price wars broke out earlier in 2012 as challenger operators began experimenting with new price plans. Strong early demand for the iPhone 5 may well spur further pricing experimentation aimed at luring in consumers unhappy with the old smartphone plan prices.

We’ve seen some radical new pricing approaches debut this year from France to New Zealand and South Africa. There is a distinct possibility the experimentation will spread to new countries in coming quarters. For consumers, comparing different phone plans and finding the best fit for personal usage may well become an even thornier challenge in coming months.

In France, Iliad has triggered a minor earthquake. The challenger operator grabbed more than 5% of France’s mobile market in less than six months by introducing a 20 euro plan. One of Iliad’s main selling points is offering the possibility to terminate the phone contract at any point. The downside of this approach is the high cost of purchasing the smartphone, which is not subsidized by the operator. Yet more than 25% of French contract customers have now migrated to such plans, showing there is real demand for unsubsidized contracts.

In New Zealand, a similar skirmish is taking place – a discount operator called Skinny has pioneered $4 weekly plans and a $19 monthly plan, dragging the leading carriers with it to a vicious price war. In South Africa, the price of mobile data plans has recently plunged to as low as $11 per 1 GB.

iPhone’s European market share may well hit 25% by Christmas and it has the potential to reshape operator pricing strategies in a profound way. In most European markets, mobile subscriber growth has stalled or even gone into reverse – markets such as Spain are now posting mobile sub declines. Smartphone sales growth has started slowing, possibly dropping below 30% in Europe in 2H12. The lack of subscriber growth is creating an environment where smaller carriers are tempted to attack leading operators by price aggression in order to gain market share.

Keeping up with the new mobile phone plans is going to occupy consumers over the next winter, particularly if the French-style plans with no long-term commitments take root.

Smartphone Plan Pricing Changing Rapidly in the US Market

American mobile phone market is entering a period of turmoil as the number of new subscribers slows down. In recent quarters, smaller operators like Metro PCS, T-Mobile and Sprint have lost hundreds of thousands of mobile subscribers, even as AT&T and Verizon have hiked up the price of cheapest smartphone plans. In the coming Christmas quarter, more than 75% of consumers buying a handset will opt for a smartphone – and challenger operators are declaring a price war.

This week saw two major announcements. Metro PCS is rolling out a new smartphone plan for as little as $55 and T-Mobile’s new unlimited plan starts at $90. Both carriers have suffered from the perception that their coverage and handset selection are sub-par compared to AT&T and Verizon. Their earlier value package campaigns have floundered on negative consumer views of their service quality.

But the pricing dynamics are now changing rapidly. Both AT&T and Verizon have dropped their cheap smartphone plans that used to offer limited texting and voice minute pools; the Top 2 carriers now demand that all new smartphone buyers buy unlimited voice and texting when entering a new contract. This has hiked the price of the cheapest Verizon smartphone plan to $90 from $70 – a notable increase considering the $90 plan offers a relatively small mobile data package.

The US smartphone market is now experiencing a rapid series of price changes that poses a complex challenge for consumers. How big of a premium is it reasonable to pay for the strong mobile coverage that AT&T and Verizon offer? How appealing is unlimited data from a second-tier carrier compared to limited data package from a leading carrier?

It’s highly likely Sprint will enter the fray later this autumn and offer its own budget smartphone plan. Now that 50% of American mobile subscribers already own a smartphone, the remaining pool of possible smartphone buyers consists mainly of households with lower than $60’000 annual household income. For these consumers, budget plans may be a lot more tempting alternative than they were for the first wave of smartphone buyers. It’s quite possible we’ll see notable market share surprises in the US carrier field during the coming winter.

WhatsApp Ascent Threatens Nordic Carriers

WhatsApp became the world’s most popular messaging service in 2011 – and in 2012, it has become the world’s number on mobile app in all categories. For many consumers, WhatsApp basically replaces SMS while offering value-added features such as group messaging and file transfer.

In Europe, the impact of WhatsApp on consumer behavior and operator performance is becoming evident at different speeds in different markets. In Netherlands, SMS pricing has historically been unusually high and consumers embraced WhatsApp immediately after its launch in late 2009. WhatsApp became a Top Three Dutch iPhone app in early 2010 and has latched onto #1 position for the most of the time since May 2010.

In the first half of 2011, the Netherlands became one of the first European markets posting notable SMS volume declines. The Dutch telecom regulator OPTA reported 2.5% text-message volume drop in 1H11 from 1H10. The decline steepened notably in 2012, leading to KPN’s substantial profit warnings. The Dutch giant carrier has blamed WhatsApp directly for its SMS revenue erosion.

In Nordic countries, SMS pricing has been lower than in the Netherlands – and WhatsApp was slower to take root. The app invaded the Top Ten chart of the Finnish iPhone apps in early 2011 after selling moderately well throughout 2010. In the July of 2011, WhatsApp became a Top Three app in Finland. Since January 2012, the app has spent most of its time as the Number One iPhone app in Finland.

What this means is that Finland was roughly one and a half year behind the Netherlands when it comes to WhatsApp becoming a mass market sensation.

Will Finland also lag the Netherlands by roughly the same time span when it comes to SMS erosion? If that is the case, Finnish mobile market might see text-messaging volume softness during 2H12. The Finnish market has shown some early signs of consumers starting to move on – the once popular SMS message blooms during Christmas and New Year were notably smaller in 2011 than during the previous holidays. However, overall SMS volumes in Finland have not yet caught the Dutch disease.

WhatsApp has now spent extended periods of time as Finland’s Number One app roughly for the past eight months. The iPhone market penetration in Finland is notably lower than in the Netherlands, which is likely to soften the WhatsApp impact to some degree over the next couple of quarters. Nevertheless, 2013 is going to be a year when we may see accelerating changes in Finnish texting habits.

The iPhone Price Spectrum in America Now Wider Than Ever

Last week, Virgin Mobile debuted its new iPhone price plan in America – and a fascinating experiment on consumer behavior is underway. Virgin’s cheapest iPhone plan is something of a gimmick – the cost is exceptionally low $30 per month, but you are only allotted 300 voice minutes. That’s 10 minutes per day, which is too little for the vast majority of consumers. But the $40 plan offers genuine value – 1’200 voice minutes and unlimited data that is throttled beyond 2.5 GB.

Verizon recently hiked its minimum smartphone monthly plan price from $70 to $90. It offers unlimited voice and texting, but a meager data package. The Verizon-Virgin smartphone price split is this summer’s biggest fault line in American mobile telephony.

We now have a $50 monthly gap between the cheapest and most expensive smartphone plans that offer decent amounts of voice, data and texting. The Virgin $40 plan and the Verizon $90 plan are not identical, because Verizon offers unlimited voice minutes. But for tens of millions of US consumers who speak less than 40 minutes per day on their mobile phones, that price differential is pretty dramatic.

It adds up to $600 a year – and $1’200 for Verizon’s two-year contract period.

What makes things interesting is the Virgin requirement to pay the unsubsidized price of the iPhone – $650 for the latest iPhone, $550 for the older one. In return, the consumer gets freed from the yoke of the two-year contract – the Virgin plan can be terminated at any point.

American consumers are addicted to steeply subsidized phones – $200 is the norm for a high-end phone, $100 increasingly familiar price point for some pretty impressive smartphones. Will people go for the cheaper option, even when it comes with a stiff up-front fee?

Until now, US phone buyers have remained notorious for accepting high monthly prices in exchange for cheap phones. But the price gap between two similar options has never been as high as it now is.

Will New Smartphone Plans Convince US Consumers to Switch Carriers?

AT&T and Verizon hold 66% market share of US mobile subscribers. But their share of mobile plans for connected devices is nearly 80% – and it is this market share domination that has enabled the Big Two to make a series of contract price moves that effectively force consumers to upgrade to more expensive plans. Both mega-carriers had dropped their unlimited data plans and cheap texting plans already in 2011. On May 12, Verizon made an even bolder move – it raised the minimum smartphone plan price from $70 to $90. At the same time, Verizon eliminated the need for a separate texting plan entirely. Consumers get unlimited texting in their smartphones – but at a dear price.

The timing was intriguing, because it followed the eye-poppingly cheap new plans announced by Virgin Mobile and Boost Mobile. Virgin Mobile will be offering a $40 monthly plan that features unlimited data, unlimited texting and 1’200 voice minutes – provided you pay the full retail price for the iPhone.  Boost Mobile will offer a $55 monthly plan featuring unlimited data, texting and voice. With Verizon’s new smartphone plan, even the minimum 1 GB monthly data allotment costs $50 – and 10 GB would cost $100.

As small rivals roll out ever cheaper monthly plans, Verizon is going into opposite direction – and AT&T is expected to follow shortly. Which is explained by that 80% chokehold Verizon and AT&T have on new connected devices. The largest operators now believe that their wide coverage areas, strong device ranges and robust brands enable them to hike their contract prices far above what small challengers are offering. But if the spread grows wide enough, will we see consumers defecting?

This summer, the smartphone plan price gap between Verizon and its small rivals will grow to an unprecedented level. It will be an interesting test of how much consumers are willing to pay for the premium brand.

Mobile Data Pricing Complexity Set to Increase

Operators in both America and Europe have been moving towards more complex ways of pricing mobile data for the past two years. But the rapid growth of data consumption combined with extremely high data needs of a small group of ultra-consumers are prompting carriers to adopt ever more baroque pricing structures. Companies will face difficult decisions about which data speeds and MB quotas each employees is entitled to have.

The overall US mobile data growth hit 123% in 2011. Cisco has forecast that the growth will top 1’500% between 2011 and 2016. The first response of carriers like  AT&T and Verizon was to move away from unlimited data packages and force new customers to choose between different price tiers.

Recent conversations with operator sources indicate that carriers are likely to move to more exotic solutions over the next two years. One likely option is a roll-out of cheap monthly plans with low mobile data transfer speeds. This would enable corporations to push majority of employees into low-cost data plans where accessing email and simple web sites would be easy, but streaming video would be painful or entirely unfeasible.

Another option being researched right now is time-sensitivity. Carriers could charge more during rush hour periods like 4 PM and less during times when networks are not congested. Yet another option is context-sensitive pricing, where streaming video would become a new data category incurring penalty fees.

In any case, companies will face tough choices. Few employees are likely to be happy being pushed into the low-speed category or facing data access restrictions during peak usage hours. Managers may need to weigh what is the utility of video streaming and how relevant that is to the job at hand.

Monitoring monthly usage patterns and changes in operator pricing plans is going to become increasingly important for companies with large numbers of mobile lines.