M-Business: The base for creating competitive advantage. The case of
Vodafone-Panafon
ANDROULIDAKIS NIKOS
Nottingham Business School
Nottingham Trent University
8, Fokeas str. Papagou
GREECE
ANDROULIDAKIS IOSIF
Network Operations Center
University of Ioannina
Univ.Campus, Dourouti
GREECE
Abstract: It’s a fact that with the 3rd generation network arrival, the potential services that can be provided through
mobile devices will be numerous. The market will eventually start to work the potentials of mobile business. Mobile
operators are the first to take advantage of these. The question is, how can they manage to create competitive
advantage, in a very competitive environment, where the evolutions are rapid. This is the question that this research is
aiming to answer. The answer to this question seems to come from the clients-subscribers of mobile operators, and
their consumer behavior. The objective of this research is the consumer trends of mobile operator subscribers (and
more specifically Vodafone subscribers). For example, which m-commerce services are they using or would like to
use in the future through their mobile phones. The research method that was used was the structured survey research
with a tick boxes questionnaire which was addressed to young Vodafone subscribers who live in Athens and are aged
between 15 and 24.
Key- Words: Mobile business, competitive advantage, opportunity, Internet, services- applications, 3rd generation
1 Introduction
The present paper investigates the way that mobile
operators can achieve competitive advantage through
mobile business services.
At this point, two definitions of mobile business
would be useful:
 Mobile Business or Mobile Commerce is any
transaction with a monetary value that is
conducted via a mobile telecommunications. [1]
 Mobile Business or Mobile Commerce is the
purchase and the sale of goods and services using
wireless mobile devices, such as mobile phones
and personal digital assistants (PDAs). [2]
There is great potential for mobile devices and their
use in business environments and as tools for trading
and commerce. However, apart from the expected
continuing developments in the device technologies
and wireless infrastructures we believe a great deal of
work is needed to enable application interoperation
and provision of other services to mobile users through
their mobile device proxies. Services such as: secure
data transmission and exchange management; data
backup and cache management; access to multiple
databases and management information systems; and
finally incorporation of contextual data, will all bee
needed to enable the m-business phenomena. [3]
The rapid proliferation of many new forms of mobile
Internet devices is providing new opportunities for
commerce transactions. Increasingly, these handheld
devices are being designed for m-Commerce
transactions, and m-Commerce is a natural extension
and complement to the current Internet shopping
experience that has seen rapid growth on the PC
channel. [4]
The present research gave answers to issues such as :
will Greek young consumers use their mobile phones
to make transactions, are they familiar with their
mobile phones and the potential that the latter have,
are they interested in new technologies that their
mobile operator can provide, are they ready to accept
the m-business evolution. This paper also tries to
investigate the kind of services that the consumers
want to use through their mobile phones.
The objective of this research is the strategic
positioning of Vodafone against the competition by
applying pioneer services that will become very
popular. The present period of time is crucial for all
the mobile operators since it is transient, from 2.5
generation mobile networks to 3rd generation. The
competition is already shrill and after the arrival of 3rd
generation mobile phones it will be more shrill. So, the
company that will be placed sooner and more
efficiently than the others in m-business services, will
create competitive advantage.
2 M-business + competitive advantage
In order to understand how mobile business can be the
base for creating competitive advantage, it is useful to
present a review of some important references that
have been made in the past concerning this subject. It
is also important to show the present mobile phone
market size in Greece.
2.1 Bibliography review
One of the main ways for a service providing company
to get differentiated is by always supplying services
that have higher quality than the competitors. The
secret is to achieve the same or higher services’ level
than the one that the target market expects. The
problem, in order to be differentiated, is that most of
the innovations in services’ area can very easily be
copied. The company that conducts all the time
researches and imports innovations in services’ area,
will gain many temporary advantages against the
competition, and by gaining the pioneer company
reputation, it can keep consumers that want the best.
[5]
M-business presents a new opportunity to enhance
business agility. Rather than being at the intersection
of E-business (or Internet) and Wireless
Communications, which has been the traditional
definition of the wireless Internet, it is a superset
comprised of business process, electronic business,
and wireless communications. It is as much about
process as it is about technology. The combination of
all of these areas creates powerful new synergies. [6]
Mobile commerce is an ostentatiously fast-moving
world where “Internet time” looks downright sluggish.
The immediacy of mobile phone connection and the
disposability of mobile devices combine with an
impulsive, lifestyle-oriented usage relationship to
create a market that expects rapid turnover of
concepts, services and brands. Players across the
board are actively looking to turn every feature of the
mobile landscape into a time-to-market advantage. [7]
Operators, such as Vodafone, TIM and Cosmote, are
best positioned to benefit from the introduction of new
m-commerce services, because they already own a
billing relationship with the customer and they control
the portal which is pre-set on the SIM card when it is
distributed. The operator’s intention is to position
itself in a key role for mobile commerce by owning the
portal and participating in the revenues accrued by
services over its network. Those revenues will be
significantly higher than the sheer increase in call
minutes or volume, particularly as the incremental
price per minute falls to zero. The mobile operator has
the opportunity to become an ISP (Internet Service
Provider) in the sense that the mobile network is going
to be built on IP technology with UMTS and that the
operator will provide a transport pipeline for content
services. [1]
Mobile operators cannot miss the emerging
opportunities of mobile commerce. The margin from
voice traffic is decreasing and the competition over
basic network services becomes harder over time.
Investments in third generation networks are massive
and they have to find ways to cover the costs and
justify the expenses. Mobile data services are expected
to become reality as the customers want to have access
to their e-mail, calendar and corporate data using
mobile terminals. Additionally, it has been noticed that
even the voice revenue increases as the customers
begin to use mobile data services. Fixed Internet
portals are built in order to increase customer loyalty
and satisfaction by providing all services within a
single environment. Also, mobile customers are
following the same pattern. Therefore, mobile
operators want to offer portal services which increase
the air time and generate extra revenue from premium
services.
There are four main strategies for mobile operators:
1. develop own portal;
2. license a portal from software
developers;
3. form strategic partnerships to provide
portal services;
4. act as a facilitator, concentrate on your
core competency;
[8]
2.2 Market background
Mobile communication networks started to be settled
worldwide during 1980 decade, but the major
development happened at early 1990s, when the digital
cell systems arrived. In Europe, the entrance of the
paneuropean digital GSM (Global System for Mobile
communications) contributed very much in the
impressive spread of mobile telephony. The first GSM
systems were installed in 1992 and up to today have
attracted above 200 millions users in Europe. [9]
In Greece the services of mobile telephony are
provided since 1993 from two companies, PANAFON
and STET HELLAS, while in 1998 the third network
was placed from Cosmote and 2001 the fourth network
from Q-Telecom. Today, the bigger share of market is
shared equal among Cosmote and Vodafone (former
Panafon) while TIM (former STET HELLAS) and QTelecom follow. The subscribers of these 4 mobile
telephony networks that are activated in the country
have exceeded the 11 millions. Indubitably this
number proves that each Greek already has his mobile,
however something like that does not happen actually,
since many Greeks "maintain" 2 or even more active
connections with contract and/or card. [9]
frequency of use of such kind of services, if they
consider these services expensive or cheap as well as
how functional they considers it is. The analysis of the
answers showed that:
57% are enough or even very much informed
regarding the possibilities of their mobile telephone
concerning mobile business services,
89% use such kind of services maximum one to two
times during 15 days. Indicative of this tendency is the
percentage of young persons that have never used such
kind of applications (43%),
64% answered that they consider internet access via
mobile phone expensive or even very expensive(see
Graphic 3.1). Hence, a reason for which the young
persons do not use their mobile telephone in order to
have access in the internet and in mobile business
services is the big cost.
30
3 The research
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The objective of this particular research is the
consuming tendencies of mobile operators subscribers
(more specifically Vodafone subscribers). In other
words, what kind of services they use or they would
like to use in the future via their mobile telephone. The
research was conducted became with a tick box
questionnaire which was addressed to young persons
of age 15-24, residents of Athens, subscribers with
contract in Vodafone company. The sample in which
the questionnaires were finally given was 50
individuals, objectively impartial and individuals
above in which the research could support itself
without influencing the reliability of results. The
research lasted almost three months (June-September).
The distribution of questionnaires began the last week
of July 2004 with two ways:
delivery and collection questionnaires and on-line
questionnaires. 70 questionnaires were totally
dispatched because it was sure that some
questionnaires would not be answered. The required
supplemented questionnaires had been collected until
the end of August 2004.
First of all, the research showed that young persons
aged 15 to 24 have been familiarized with the internet
and might very easily be adapted in the new mobile
business services, since the 88% of them use Internet
via PC (from their house or from somewhere else) at
least one to two times per week.
Hardly 56% of the sample have mobile telephone
device with internet access possibility, result rather
ominous for mobile business. The particular
percentage was asked for the degree of information
they had regarding the possibilities of their mobile
telephone concerning the mobile business services, the
EX
Remarkable is the swift growth of mobile telephony
market in Greece since its beginning, in July 1993. In
late 1993 the penetration in the market was hardly
0,3% while in 1994, the subscribers of mobile
telephony were hardly 167 thousands, something that
is 1,5% in degree of penetration. Today this
percentage is 70% with rise tendencies. In any case,
although the penetration of mobile telephony is
presented as continuously increasing, it tends to reach
its maximum possible levels, something rendering
imperative the need for growth of value added services
within the next few years, opening the way for the
growth of mobile commerce. [10]
The following research was carried out in order to
understand the tendencies and the opinions of
consumers regarding the mobile commerce
applications in Greece will become known.
Graphic 3.1: Cost of internet access via mobile phone
79% of the sample considers internet access process in
mobile business services enough functional up to
normal.
Young persons’ most desirable mobile business
applications are with order of priority (see Table 3.1):
General information (news, time, cinema, theatre, bar
etc.)
Sending and receiving e-mail
Entertainment (games, music, ring tones, logos)
Most desirable mobile business applications
(1-Most desirable..7-Less desirable)
APPLICATIONS
Average
General information
E-mail
Entertainment
Travel information
Products’ purchase
Bank transactions
Chat
2,72
3,12
3,24
3,72
4,32
5,12
5,76
Table 3.1: Desirable mobile business applications
The question that followed concerned whether the
asked person would change mobile telephony
company if another one was more evolved on mobile
business issues. The result was that 56% answered that
they are willing to seek for another more evolved
company in case their company, in which they are
subscribers, was not evolved in this sector. The
percentage of affirmative answers is enough to give to
the companies one big motive to accelerate their
processes of development on m-business issues
because it appears that the company which is
permanently one step ahead of the others is the
company that has achieved competitive advantage.
Afterwards, the asked persons were called to classify
the factors which they consider important in order to
use mobile business services. The analysis of answers
showed that the more important factors are the cost of
access, the facility of use and the access-download
speed. The next question concerned the transactions’
safety via mobile telephone. 44% consider mobile
transactions not very safe while a 8% consider them as
not safe at all. That is to say that 52% of the sample
would not deal via mobile for reasons of safety. (see
Graphic 3.2)
VERY SAFE
16%
8%
SAFE ENOUGH
4%
28%
NOT SAFE
ENOUGH
44%
NOT SAFE AT
ALL
DN/DA
Graphic 3.2: Mobile transactions’ safety degree
Mobile operators should become more activate in
safety sector, providing safety feeling to the users
otherwise the latter will not use mobile business
services requiring transaction. This means loss of
important income for the companies. Following, the
sample was asked for the way of mobile transactions’
refunding that would make them feel safe. 48% of the
sample would debit his transactions in his mobile
telephone number in order to be more safe and he
would pay off via the monthly account. The
percentage (40%) that answered that it would feel safe
if it paid off its transactions with reimbursement was
also big, while only 8% would give his credit card
number via mobile.
An interesting aspect of mobile business is the
potential that mobile operators will have to get
advertised or to advertise other companies through
mobile telephones (mobile advertising-mobile
publicity). Therefore, the sample was called to answer
if it would be bothered to accept advertisements via
mobile device with a reward of free time of speech or
free of charge SMS or something similar. 68%
answered that it would not be bothered. Interesting for
mobile telephony companies, who can exploit this by
making contract agreements with abundance of
companies so that the latter advertise themselves in the
screen of mobile telephones of the subscribers.
Finally, the asked young persons answered that they
would use mobile business services for entertainment
(28%), facility (22%) and information (20%) while
they would not use such type of services for reasons
such as high cost (60%), lack of safety (56%) and low
speed (16%).
4. Conclusions
Almost one hundred years since Ford introduced the
Inside Out philosophy with the eminent phrase
"Produce cars as long as they are black”. In our days
this philosophy is not applied. Henceforth, the deep
knowledge of market is necessarily (the philosophy of
Outside In). During the last few years, more and more
companies apply customer oriented policy. They adapt
their strategy based to the customer’s wishes. Mobile
operators have also started to apply this policy. With
datum, that the mobile business services will involve
revolution in the market and will be the basic way of
bringing profits to mobile telephony companies, a
research focused in the wishes of consumer regarding
the particular services should be done. The company
which will fill most conditions and will cover the
wishes and the needs of customer, regarding mobile
business, will automatically acquire competitive
advantage.
References:
[1] Muller-Veerse, F., “Mobile Commerce Report ”,
Durlacher, 1999
[2] http://www.whatis.com
[3] Hawick, K.A., James, H.A., “Middleware issues
for mobile business and commerce”, Published in
WSEAS Conference on E-Activities, Singapore,
December 2002, http://www.worldses.org
[4]Milanovic, S., Mastorakis, N.E., “Building a
Strategic m-Commerce Services Platform” Published
in WSEAS Conference, Math2004, IMCCAS2004,
ISA2004 and SOSM2004, Miami, Florida, April 21-23
2004, http://www.worldses.org
[5] Kotler, P., “Marketing Management”, 9th Edition,
Interbooks, Athens, 2000
[6] Evans, N., “Business Agility: Strategies for gaining
competitive advantage through mobile business
solutions”, Prentice Hall Inc., New Jersey, 2002
[7] May, P., “Mobile Commerce”, Cambridge
University Press, Cambridge, 2001
[8] Paavilainen, J., “Mobile Business Strategies ”,
Wireless Press, London, 2001
[9] ICAP, Research for fixed and mobile telephony,
2001
[10] MobiCom project, (2001), “European Mobile
Commerce Survey” , AUEB