Consumer Price Sensitivity Has Increased Over Last 12 Months

If the United States is in an economic recovery, it is an odd one, a study by Parago suggests. 


Consumer spending has not rebounded and price sensitivity remains a key behavior, the study found. In fact, shoppers’ sensitivity to price has actually increased in the last 12 months. Some 66 percent of those surveyed said price was the primary factor in deciding what to purchase, up from 60 percent last year.


This is due to the collaborating perception that their  purchasing power has decreased in the last 12 months, the study suggests.  "Consumers are digging further into the recessionist mentality and are fortified for a long winter of seeking out savings," the report says. 


Not every product is being viewed that way, though, one might conclude from Apple iPad sales. 

Can Regulation Actually Help Special Access Outcomes?

The Federal Communications Commission recently has been looking at regulation of special access prices, as always with a view to promoting competition. But economists at the Phoenix Center for Advanced Legal & Economic Public Policy Studies say in a paper that if the Commission continues to adhere to a geographic market that is “location specific,” which is consistent also with the position of those calling for renewed regulation of the services, then price regulation reduces economic welfare in all instances.

In other words, regulation cannot actually improve outcomes for the economy as a whole, even if it benefits buyers of wholesale special access from the underlying carriers selling that access. 


The basic problem is that in local markets, both sellers and buyers effectively are monopolists. The effect of regulation in such settings is mostly to transfer profits from seller to buyer, but every $1 of transfer costs more than $1 to society, so price regulation of special access services in location-specific markets unambiguously reduces welfare.


Obviously, the question of market definition will be critical in determining the path forward on regulating special access services; in fact, far more critical than the extent of competition, the Phoenix Center argues. 

Mobile Banking Faces "Chasm" After Early Adopters

Crossing_the_Chasm, Geoffrey Moore's book about the technology diffusion process, makes the point that there is a chasm between the early adopters of the product (the technology enthusiasts and visionaries) and the early majority (the pragmatists) whose adoption is key for any new technology to take hold in the mass market.

Essentially, Moore argues that technology adopters have very different values, requiring a shift of marketing emphasis at each stage of additional adoption.

Crossing the Chasm is closely related to the technology adoption lifecycle where five main segments in turn must be won over: innovators, early adopters, early majority, late majority and laggards.

That same process is at work in the mobile banking business as well. Fiserv argues that many banks and credit unions are on a mobile  adoption path that attracts the early adopters within  a year of offering the service, but the trajectory  stagnates to include just a small additional percentage  of adopters over the next two years.

That’s the “chasm” Moore talks about. Early adopters have embraced mobile banking because it is cool. The next wave of adopters actually will not see that as an advantage, and will resist.

To break through the “glass ceiling” of 20 percent  mobile banking adoption, Fiserv argues,
financial institutions must convince customers outside the pool of early adopters  that mobile banking will provide both convenience and benefits that cannot be experienced through other channels.


In other words, consumers must decide if mobile banking is: 1) useful, 2) accessible, 3) secure, 4) familiar and 5) easy to use. 


How consumers answer these questions will impact the adoption outcome.

Global Mobile Phone Shipments Slow, Economy the Reason?

The worldwide mobile phone market is forecast to grow slightly more than four percent year over year in 2012, the lowest annual growth rate since 2009, due to a sharp decline in the feature phone market and sluggish global economy.


According to IDC, vendors will ship a total of nearly 1.8 billion mobile phones this year, compared to 1.7 billion units shipped in 2011. By the end of 2016, IDC forecasts 2.3 billion mobile phones will be shipped to the channel.


The slow growth in the overall mobile phone market is primarily due to the projected 10 percent decline in feature phone shipments this year. Many owners of feature phones are holding on to their phones in light of uncertain job and economic prospects.


That is not to say consumer behavior always is a leading indicator. Often, consumer behavior is a lagging indicator. In this case, the lower demand for feature phones probably is more a response to declining economic growth.


Since the global recession ended in 2009, the world economy has been fueled powered by rising powers in the developing world led by China, India and Brazil.Now, all three are running into trouble. But Europe's obvious slowdown, threatening to become a renewed official recession, also is matched by similar concerns about the U.S. economy. 

How Will Mobile Service Providers Cover Fixed Costs as Voice Usage Drops?

There will be predictable griping if U.S. and other mobile service providers change retail packaging of voice services in the future, perhaps dropping the "buckets of minutes" plans of various sizes with "one size fits all" unlimited plans.

From a service provider perspective, the ways revenue is offered at retail include both a usage and a fixed cost recovery component. In that sense, how much consumers get charged for a bundle of features and services is partly a matter of traffic sensitive and fixed costs that basically don't change much.


The potential shift of voice calling to unlimited plans is a response to the "fixed costs" part of the cost recovery issue. One can debate whether all network and other fixed costs are appropriate or not. But those fixed costs don't change much based on which services--ranging from text messaging to voice to broadband data--users decide to use.

The simple fact is that the sunk costs of running the network must be recovered, no matter what the usage-sensitive patterns are. And if users are shifting from voice to Internet apps, or from text messaging to over the top messaging, the fixed costs still must be covered.

So a shift to "unlimited" calling is simply one way of recovering the fixed cost portion of providing the full package of features people associate with mobile phones, especially smart phones.

Precisely how those charges are levied will vary from time to time and carrier to carrier. The point is that fixed costs don't change because usage of some apps, services or features changes over time.

Not everyone will be happy with how retail features are priced. Some will complain that profit margins on some products are "too high." That doesn't actually matter much, either. All multi-product retailers sell products with varying margins, some high, some low, some in between. From a mobile service provider's perspective, the main issue is ensuring that the fixed costs get covered.





 

InMobi Says Tablet Ad Impressions Grew 88% Last 6 Months

Tablet ad impressions on the InMobi North American ad network grew 88 percent over the last six months, illustrating the way the new device is creating a new market for mobile advertising.

In fact, tablet impressions have been growing nearly twice as fast as smart phone impressions in North America.  Anne Frisbie, InMobi VP and Managing Director, North America, attributes the tablet growth in part to the appeal of larger screen sizes and growing tablet ownership.

The report finds that Apple clearly dominates, with iOS tablet devices currently commanding 71 percent of the overall impression share, followed by Android with 29 percent. Since those percentages roughly correspond to the installed base of devices, the findings are not unexpected.

North America Tablet OS ad impressions
OS	Q4 2011	Q1 2012	Pt. Change
iOS	81.6%	70.8%	-10.8%
Android	18.2%	28.9%	10.7%
Others	0.2%	0.3%	+0.1%

Despite entering much later to the market than many of its competitors, the Amazon Kindle Fire performed second (9.2 percent) to the Apple iPad (70.8 percent) in the first quarter of 2012.

North America Top Performing tablets, total ad impressions
OS	Q4 2011	Q1 2012	Pt. Change
Apple iPad	81.6%	70.8%	-10.8
Amazon Kindle Fire	N/A	9.2%	N/A
Asus Eee Pad Transformer TF101	2.7%	5.2%	2.5%

Are Mobile Platform Wars Just About Over?

It's a provocative question, but looking at adoption of mobile operating systems, you have to wonder whether the smart phone platform wars are just about over. Microsoft would argue otherwise, and lots of people seem to think that is not an empty boast. Research in Motion might say the same thing, but more people are skeptical about a RIM comeback.