StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Wireless Telecommunications Industry - Term Paper Example

Cite this document
Summary
This paper “Wireless Telecommunications Industry” examines the prospects and recommends marketing strategies for the wireless telecommunications industry. It also examines the current situation and prospects of Nokia, as a wireless telecommunications player…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98.2% of users find it useful
Wireless Telecommunications Industry
Read Text Preview

Extract of sample "Wireless Telecommunications Industry"

Wireless Telecommunications Industry This paper examines the prospects and recommends marketing strategies for the wireless telecommunications industry. It also examines the current situation and prospects of Nokia, as a wireless telecommunications player, and likewise makes recommendations on appropriate marketing strategies for Nokia to succeed moving forward in the space (Vodafone; Verizon; Prieto-Munoz; Zacks Equity Research). II. Industry A. Scope, Segments Analysis- Wireless Telecommunications Industry The wireless telecommunications industry is also called the mobile telecommunications industry for practical purposes by industry participants, including Vodafone, which sees the industry as being vibrant and dynamic, and filled with opportunities for all players (Vodafone). The CTIA, which is the umbrella organization for the wireless telecommunications industry, lists members that are the who's who from the carriers to the technology providers, including the major American carriers AT&T, Verizon, and Sprint, and technology providers Google, Nokia, Apple, Microsoft, Samsung, ZTE, Symantec, Intel, Lenovo, Dell, Alcatel-Lucent, and Nokia Siemens, to name a few (CTIA). The industry worldwide is said to have a current customer base consisting of around 80 percent of the global population, or 5.6 billion people. Three-fourths of the customer base is to be found in the developing world markets, chief among them the markets in China as well as India. Total revenues from the mobile telecommunications industry amounts to 900 billion dollars worldwide in 2011, equivalent to 1.5 percent of the global GDP. Voice is the key source of income in many markets that are mature, such as in the West and in Europe and the US in particular, even as the long-term shift seems to be a transition towards more and more subscriptions to larger and larger amounts of data. This is in line with the shift in the wireless telecommunications industry where smart phones are coming to dominate the access devices, alongside other portable wireless devices, that are increasingly making use of more and more data (Vodafone): Mobile services account for around 60% of telecommunications revenue with the remainder coming from fixed. Within mobile the majority of income comes from voice calls in mature markets such as Europe. However, the fastest growing revenue segment is data services such as access to the internet through laptops, tablets and smartphones (Vodafone) Moreover, as far as voice is concerned, more and more of the voice calls in the telecommunications industry are being done through wireless telecommunications modes, overpowering traditional fixed line voice businesses in many parts of the world (Vodafone): The number of mobile customers far exceeds other forms of electronic communication. Only 1.3 billion people have fixed line telephones, 2.1 billion have access to the internet and 1.2 billion have televisions. The mobile proportion of voice calls has increased over the last five years and now accounts for 82% of all calls made, with the remainder over fixed lines, reflecting the benefits of mobility, lower cost handsets and cheaper calling plans. (Vodafone) The plot below details the breakdown of mobile telecommunications customers around the world by geographic location, where the total market is around 5.6 billion, and the customers dispersed and well-represented by geographic regions (Vodafone (b) 8): Graph Source: Vodafone (b) 8 In the plot above, the customer bases of India and China are significant for having substantial shares relative to the global totals. China's share of 16 percent, and India's 15 percent share, is almost the same as all of Europe's share of about 19 percent, and each compares with all of the share of the rest of Asia and the Pacific. The two combined account for 31 percent of the globe's customer base for wireless telecommunications services. On the other hand, as the previous discussion has shown, the differences are in the areas of voice over data services in wide use in the different markets, with Europe being voice-centered, and other markets being more dominated by the use of data services (Vodafone). Opportunities, meanwhile, are reflected in the rate of market penetration for wireless telecommunications services in the different geographic markets, with a lower market penetration corresponding to more opportunities to sell more services, and vice versa (Vodafone (b) 8): Graph Source: Vodafone (b) In the plot above, it is clear that the mature markets of Europe and the United States are saturated, with market penetration exceeding 100 percent, while the India and China markets are undersaturated, given the market penetration rates of less than 100 percent. The same goes for Africa as a whole (Vodafone (b) 8). Meanwhile, projections for growth in wireless telecommunications services in different markets are positive and bullish, even as the projections represented below are quite conservative (Vodafone (b) 9): Plot Source: Vodafone (b) 9 B. 2011 Industry Performance Analysis Even in the mature markets, where by some estimates market penetration for wireless telecommunications services is at 95 percent, the new frontier as far as additional sources of revenues go is in the area of data services. The market base of 290 million is not saturated in terms of the subscription rates for smart phones, even as about 40 percent of new phone purchases in recent quarters in the US have come to be dominated by smart phone purchases. The take is that as of the most recent quarter in 2012, the penetration rate for smart phones in the United States is 31 percent. The penetration rate for smart phones in the US is expected to reach 67 percent come 2015. The trend towards greater use of wireless broadband data services, and the decline of wireline data services via traditional land lines and wireline broadband, all point to a sustained future shift towards more and more data services demand for wireless data services in the United States (Verizon). The plot below details global and US growth rates for wireless telecommunications services that show declines in growth during the worst of the global financial crisis, and reflect trends towards more data services demand from the rollout of newer 4G networks worldwide, as well as the continued use of cloud computing services making use of mobile telecommunications devices and infrastructure (Verizon): Graph Source: Verizon The plot below details the industry performance for 2011. In the total market for wireless telecommunications services worldwide, revenues went up 6.8 percent, which is an improvement over lower rates of growth in the previous year, and negative growth in 2009. International market growth in revenues for wireless telecommunications services of 7.7 percent offset lower growth rates in revenues in the US market, even as the growth rate in revenues for 2012 is already surpassing 2011 figures for both the US and the international markets. This bodes well for the future growth of the wireless telecommunications industry as a whole (Verizon) Taking a step back, the key players in the wireless telecommunications space can be divided into two groups, one consisting of the major carriers, such as AT&T and Verizon, and another consisting of the cell phones and related equipment manufacturers, which include Samsung and Nokia, among others. The following graphic details the market share of the manufacturers, reflecting the general performance of the industry from the point of view of the manufacturers (Prieto Munoz slides 9-12) Graphic Source: Prieto-Munoz slide 12 In the graphic above, the key players in the space are Nokia, Samsung, LG, Apple, ZTE and Research in Motion. On the carrier side, the key players are Verizon, AT&T, Sprint, T Mobile, TracFone, MetroPCS, US Cellular, and Cricket (Prieto-Munoz slides 9-12; van de Ven, Amantea, Andrews and Klamert 4-6). C. 2012 Industry SWOT Analysis C1. Strengths The industry is operating from a number of strength factors, chief among them is the resilient demand for wireless telecommunications services, it being emergent, and necessary, to the daily life of individuals and societies. Two, the emerging explosion in demand for data services mirrors the continuing shift towards mobile as the preferred mode of accessing the Internet, and that demand is adequately met by existing and emerging technologies that will offer more data at faster rates of connection moving forward. Three, investments by existing players in innovation to improve device technologies as well as wireless telecommunications technologies will ensure sustained interest and demand. Already, investments by carriers in wireless telecommunications infrastructure has been very large, estimated at US 300 billion dollars over the past decade and a half, representing substantial investments in wireless infrastructure that can then be leveraged for future growth and future accommodation of new demand for data (Zacks Equity Research). C2. Weaknesses There is a possibility that investment spending shall slow down as carrier revenues plateau and carriers become prudent with investing in new technologies. This hurts the prospects of technology vendors, who are dependent on the carriers for revenue growth. Offtaker credit quality is also suspect. This refers to the creditworthiness of subscribers. Competition in the industry is expected to further intensify, as non-traditional players enter the space to compete with established players. This can hurt prospects for profits for everyone (Zacks Equity Research) C3. Opportunities There are opportunities for sustained and stable growth in the wireless telecommunications space as economies get better, and as the demand grows naturally with economic growth over time. The fact that wireless has become a necessity in modern life makes this so. As governments pump-prime their economies in order to get them back unto a path of growth, wireless telecommunications players will reap the benefits from increased demand and use for data and other services. Meanwhile, in the US, there are opportunities for wireless telecommunications players coming from the plan by the federal government to double the spectrum space for wireless, to further spur innovation and the introduction of new broadband services. There are opportunities too, for entrenched players in the space to diversify into global markets, as a way to diversify risks and exposures to their home markets (Zacks Equity Research). C4. Threats The industry is dependent on the state and direction of the country and global economies to some extent, and the risks tied to the economy translate to risks for the wireless telecommunications sector as well. For technology vendors in the space, economic slowdowns translate to even more judicious capital spending on the part of the carriers, and those carry risks for the vendors in terms of being able to meet revenue and profitability targets at any given time. Economic risks are relevant. Also, the rapid pace of innovation in technology translates to risks of obsolescence and of being left behind for players with shallower financials, reduced access to innovation, and generally with fewer opportunities to engage in sustained competition with players with deeper pockets and greater funds for research and development (Zacks Equity Research). D. Examples of Served Target Markets, Marketing Mix Strategies Used by the Industry The literature details the growing shift away from voice services towards more data as well as more video-related services for the wireless telecoms industry. The market segmentation is via the kinds of services used by players. Another market segmentation is by cell phone type, of which the literature tells us that the target market for data services consists of those subscribers who use smart phones as their key mode of access for data services. The industry has responded in several ways. The carriers have come to emphasize smart phone plans with tiered data pricing in the offing, to tweak those elements of the marketing mix to cater to this emerging market segment's needs. The equipment vendors, in turn, have stepped up the innovation in the smart phone devices space, so as to be able to entice more subscribers to switch to smart phones. The carriers in turn are using the innovation in the devices space to further entice customers to buy more data, and to subscribe to more expensive data plans (Zacks Equity Research; Prieto-Munoz; Verizon; Vodafone). E. Industry Future- Short-Run and Long-Run Forecast There are several data sets that show promising growth prospects for the wireless telecommunications industry in the short run as well as in the long run. In the short run, where the time window is the next few years, there is an expected growth in revenues for the industry in the US with the compounded annual growth rate at about 3.7 percent through 2015, as the plot below demonstrates (Verizon): Graph Source: Verizon In the plot above, wireless data is expected to grow the fastest, with wireless voice taking a hit with negative growth (Verizon). As discussed earlier, data will be the new growth area, and in the long-run, it is the growth in data use that will guarantee the healthy growth prospects for the wireless telecommunications industry, through to 2020. Between now and 2020, data use growth shall be rapid, with growth accelerating year on year from 2012 onwards, according to projection figures (Salen): Plot Source: Salen The plot above details wireless data use in the United States from 2010 to 2020 projected, with the usage figures in billions MB. By 2020, for instance, data usage in the US is expected to reach about 68,000 billion MB, for wireless telecommunications data access. This represents an explosion in data usage from negligible levels achieved in 2010, and in 2011. In 2012, growth over 2011 figures as reflected in the above plot is already fantastic, representing a doubling of data usage, but this growth will pale in absolute terms in comparison to what data usage figures are expected to be like by the end of the decade (Salen). In all short-run and long-run growth prospects for the industry are excellent (Zacks Equity Research). F. My Marketing Recommendations- What Should Be Done By the Industry to Succeed Moving Forward The industry as a whole is in a good position to capitalize on the trend of growth in the use of data services tied to mobile telecommunications, by offering innovative data and related services to consumers. In terms of the marketing mix, this translates to coming up with products that are priced competitively, and which meet unique customer needs, at the places where they consume the data. Promotions and proper market research are keys to coming up with the right marketing mix elements for new products (Zacks Equity Research; Vodafone; Verizon; Prieto-Munoz; Salen). III. Major Company- Nokia A. Analysis- Line of Business, 2011 Sales and Profit Performance Nokia competes with Google, Apple and Samsung, among others, in devices manufacturing and marketing, in cellular phones, and in the smart phones markets. It also competes in software for maps, as well as in network infrastructure via its Nokia Siemens Networks business segment. In maps, it has bolstered its position with Navteq and the acquisition of mapping concern earthmine Inc. Its Devices and Services segment is at the heat of its on-going repositioning and rebranding with its Windows Phone line of smart phones, called the Lumia. The following are its key financial metrics (Google; Reuters): Q3 (Sep '12) 2011 Net profit margin -13.03% -3.85% Operating margin -7.96% -2.78% EBITD margin - 1.26% Return on average assets -12.38% -3.95% Return on average equity -46.11% -8.87% Employees 105,265 - Carbon Disclosure Rating - 84/100 Table Source: Google The following chart tracks Nokia share prices over the past 12 months (Google): Plot Source: Google In the plot above, current share prices are about half of what they were a year ago, even as the more recent price movements have shown substantial appreciation from the lows of the share price of just a few months ago (Google). Its poor financial results over the past few quarters, and for the whole of 2011 at least, have resulted in the downward spiral of the share prices, even as the introduction and good market prospects of its current Lumia Windows Phone 8 smart phones have given investors and analysts reason to be optimistic about where Nokia is going moving forward (Vatalyst; Harvey; Donkin; Hussain; ValueMax; Holmstrom; Steinberg). The table below, meanwhile, details 2011 sales and earnings figures, as well as analyst estimates for both for 2012 and 2013 (Reuters (b)):   # of Estimates Mean High Low 1 Year Ago SALES (in millions) Quarter Ending Dec-12 14 9,829.95 10,965.80 7,687.10 15,325.00 Quarter Ending Mar-13 13 8,888.58 10,625.40 7,925.37 12,428.10 Year Ending Dec-12 19 38,681.90 39,946.10 37,342.00 53,371.50 Year Ending Dec-13 19 37,582.90 48,411.30 32,848.30 56,849.30 EARNINGS (per share) Quarter Ending Dec-12 15 -0.06 0.03 -0.13 0.18 Quarter Ending Mar-13 14 -0.08 0.01 -0.16 0.09 Year Ending Dec-12 22 -0.34 -0.16 -0.49 0.34 Year Ending Dec-13 22 -0.06 0.31 -0.38 0.52 LT Growth Rate (%) 4 1.75 10.00 -13.00 4.29 Sales and Earnings Figures in U.S. Dollars (USD) Table Source: Reuters (b) B. Examples of Target Markets, Marketing Mix Strategy for the Company The Nokia Lumia range of phone targets the same target markets as the premium segments that the iPhone and top of the line Galaxy phones from Samsung do. The positioning is based on product features parity or superiority, coupled with innovation in design as well as differentiation in other product attributes, including the camera, the user experience in the OS via Windows, exclusive apps, mapping, and music and related services offered for free. These are product aspects of the mix that are leveraged together with distribution advantage and targeted exclusive arrangements with carriers. The marketing mix for the rest of the Lumia range, by strategy, offers differentiated and targeted product and price features that are designed to cater to different market segments by socio-economic stature. The Lumia range has products for the premium segment, and the mid-tier segments of the smart phone market (Vatalyst; Harvey; Donkin; Hussain; ValueMax; Holmstrom; Steinberg) C. My Analysis- Differential Advantages/Strengths and Weaknesses of the Company Nokia has several differential advantages, including scale, strong brand equity, strong partnerships with carriers and now with Microsoft for the OS, outstanding legacy of hardware excellence, design, global reach, and deep penetration and presence in key emerging markets such as India and China. Its core strengths flow from these as well. On the other hand, its key witnesses include the slow way in which it reacted to changes in the smart phone market, resulting in its being relegated to the follower status in a market now dominated by Apple, Samsung and Google. This weakened stature translates to a weakened financial power as well, as reflected in reduced sales and profitability, reduced cash hoards, and reduced ability to invest in new research and development to fund innovation. The financial weakness also limits investment in new products and new technologies by way of acquisitions. These weaknesses feed on each other and work together to limit the prospects of Nokia to a certain extent. The Microsoft partnership, which involves technology sharing as well as substantial financial inflows into Nokia from Microsoft, mitigates these financial weaknesses somewhat (Vatalyst; Harvey; Donkin; Hussain; ValueMax; Holmstrom; Steinberg), D. Analysis- Company's International Performance Internationally, the company continues to do well, especially in the basic phones segment, where it still dominates many markets, and where the company has retained its excellent traction in terms of volume sales and mind share among consumers. The Lumia is hoped to be able to revive its international fortunes in smart phones as well Vatalyst; Harvey; Donkin; Hussain; ValueMax; Holmstrom; Steinberg). E. Company Future- Short-Run and Long-Run Forecast From the analyst forecasts it is clear that the short-run prospects of Nokia remain shaky. Short-run revenue and profit projections remain dismal, with revenues for instance expected to decline from 2011 levels, and expected to remain weak in 2013.. On the other hand, the uptick in share prices suggest that analysts see some improvement in long term prospects for growth for the firm. As analyses indicate, the long-term viability of Nokia depends, hinges on, its ability to turn itself around and to grow the Lumia business (Vatalyst; Harvey; Donkin; Hussain; ValueMax; Holmstrom; Steinberg) F. My Marketing Recommendations- What Should Be Done by the Firm/Company to Succeed Moving Forward I share analyst conclusions that Nokia has the right marketing mix for its Lumia line of smart phones, and is poised to reap the financial rewards of that excellent marketing mix. From a marketing point of view, the appropriate strategy is to reinforce the existing working formula of differentiated offerings and close partnerships with carriers, to offer products that cater to different market segments for smart phones, from premium to budget to mid-range market segments by price and by socio-economic standing of the customers/buyers (Vatalyst; Harvey; Donkin; Hussain; ValueMax; Holmstrom; Steinberg) Works Cited CTIA. “CTIA Membership”. CTIA.org. 2012. Web. 8 December 2012. Donkin, Chris. “Nokia's share price rises following China Mobile deal”. Mobile News. 6 December 2012. Web. 8 December 2012. Google. “Nokia Corporation”. Google Finance. 2012. Web. 9 December 2012. Harvey, KD. “Nokia shares spike by 12%: Is the Lumia 920 doing that well?”. VR-Zone Technology Beats. 22 November 2012. Web. 8 December 2012. Holmstrom, Mathias. “Nokia: Why Stephen Elop Made the Correct Decision in Abandoning Symbian”. Seeking Alpha. 15 November 2012. Web. 8 December 2012. Hussain, Abu Bakr. “The New Nokia Lumia Range of Devices- Has Nokia Finally Reestablished Its Premium Image?”. Seeking Alpha. 20 November 2012. Web. 8 December 2012. Prieto-Munoz, Pablo. “Wireless Telecommunication Industry Overview”. Columbia University Civil Engineering and Engineering Mechanics. 13 February 2012. Web. 8 December 2012. Reuters. “Nokia Oyj”. Reuters.com. 2012. Web. 8 December 2012. Reuters (b). “Nokia Oyj Financials”. Reuters.com. 2012. Web. 8 December 2012. Salen, Kristina. “Telecommunications”. Fidelity Investments. 2012. Web. 8 December 2012. Steinberg, Jacob. “ Shh! Analysts Are Quietly Upgrading Nokia”. Seeking Alpha. 26 October 2012. Web. 8 December 2012. ValueMax. “Nokia: Multiple Reasons to Buy This Stock Now”. Seeking Alpha. 7 November 2012. Web. 8 December 2012. van de Ven, AJ, Adam Amantea, Amy Andrews and Lisa Marie Klamert. “Wireless Telecommunications Industry Analysis: Mobile Phone Service Providers”. California State University San Marcos. 25 February 2004. Web. 8 December 2012. Vatalyst. “Nokia: A $3 Bargain On Mobile Phone Hyper Growth”. Seeking Alpha. 5 November 2012. Web. 8 December 2012 Verizon. “Industry Overview”. Verizon.com. 2012. Web. 8 December 2012. Vodafone. “Annual Report for the year ended 31 March 2011”. Vodafone.com. 2011. Web. 8 December 2012. Vodafone (b). “Annual Report for the year ended 31 March 2011- Full Report”. Vodafone.com. 2011. Web. 8 December 2012. Zacks Equity Research. “Telecom Outlook- June 2012- Industry Outlook”. NASDAQ.com. 2012. Web. 8 December 2012. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Wireless Telecommunications Industry Term Paper, n.d.)
Wireless Telecommunications Industry Term Paper. Retrieved from https://studentshare.org/media/1790574-marketing-report
(Wireless Telecommunications Industry Term Paper)
Wireless Telecommunications Industry Term Paper. https://studentshare.org/media/1790574-marketing-report.
“Wireless Telecommunications Industry Term Paper”, n.d. https://studentshare.org/media/1790574-marketing-report.
  • Cited: 0 times

CHECK THESE SAMPLES OF Wireless Telecommunications Industry

AT&T and BellSouth merger

According to Mark del Bianco, a Communications Attorney who wrote Bumps in the road for AT&T-BellSouth merger, both BellSouth and AT&T own considerable chunks of prime wireless spectrum that is unused and that could quickly and relatively cheaply be used to provide broadband services that would compete with telecom and cable wireline broadband services--in other words, the long-sought "third pipe" to the home or business.... The natural combination of two leading wire line providers and joint owners of Singular speeds progress in integrated wireless/wire line services will improve the services provided to the customers....
4 Pages (1000 words) Essay

Financial Aspects of Business

hellip; The cellular industry has over 2 billion users worldwide.... What is amazing about this number is not the actual amount of cellular users, but the boom It took 20 years for the industry to reach the one billion user mark, but over the last three years the amount of users double to surpass the three billion user mark (Cellular-News).... 3G technology has revolutionized this industry.... “The Korea Association of Information and Telecommunication estimates that cell phone GPS tracking service are growing at an annual rate of 74%”( Wireless, Wi-Fi, RFID & Cellular industry Trends, 20)....
5 Pages (1250 words) Essay

Price Changes in Stock Market of Verizon Communications

As we know that the sky rocketing oil prices has become a cause of concern through out the world and is not only affecting the telecommunication industry but it has a highest impact on the world economy.... Later with the mergers of Bell South and AT and TINC, It became the largest telecommunications company based on its profits and assets in the world.... The reason behind this downward movement is shares of all telecommunications service providers in the US were seen downward due to low sentiment from buyers on Tuesday....
9 Pages (2250 words) Essay

AVAYA Case Study (Marketing)

The industry is becoming more globalize due phase out… Ayala has fair well in IP telephony products and contact center market being the market leader in both.... The telecommunication sector has a US marketplace of $1.... trillion, with the global marketplace been worth more than $3....
4 Pages (1000 words) Essay

Economic Functions of the Government: Maintaining Competition

Being a monopoly or even just a big player in an industry yields many advantages and if not properly monitored will affect the consuming individuals negatively.... AT&T's plan to buy T-Mobile is a clear tactic to eliminate competition from its potential rival in the telecommunication industry.... And these companies happen to cater services that are of importance to our fast moving lives- the telecommunications services?... AT&T is one of the largest telecommunications services provider in the United States and even worldwide....
2 Pages (500 words) Essay

ANALYZING SPSS(PASW) SOFTWARE PART 2

This thesis seeks to answer the following question: How can businesses leaders in the telecommunications industry shape the future of the telecommunications industry to arrive at a sustainable business value?... With the introduction of internet, mobile phones, and now smart phones, the number of users has increased (Goggin & Hjoth,… The companies however are still responding to the changing consumer requirements of modernized infrastructure and reliable peaking rates that are the characteristics of today's telecommunication industry....
5 Pages (1250 words) Essay

AT and T Top Buyer at US Airwaves Auction

The other information is based on an opinion from different analysts in the wireless communication network field and experts from various technology firms.... An increase in the airwaves of mobile data means an expansion in the wireless communication field.... The latest culprit to be hunted down by the federal authorities is TracFone wireless which has been fined $40 million as a result of getting involved in the scheme....
5 Pages (1250 words) Essay

Financial analysis

The cellular sector has become the fastest growing segment of the telecommunications industry.... The cellular sector has become the fastest growing segment of the telecommunications industry.... A major merger that occurred in the industry in 2013 was Japan Softbank merged with Sprint Nextel.... Focusing on selling smartphones with better features and specifications has become the mostly utilized strategy in the industry to achieve growth....
2 Pages (500 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us