The market potential for new m-business services is driven by the volume of users that would use and buy a service and the pricing associated with service usage. Most service development starts with a simple market analysis: How many users will be using these services? The answer to this depends on how widely a service is defined. A truck delivery service will have a much smaller addressable market, but the value proposition for this service is a real productivity enhancer, perhaps increasing the productivity of a delivery fleet by 10%. Service pricing, therefore, could be relatively high on a per-user basis. When first introduced in the early 1990s, SMS on mobile phones represented a small market, but by enhancing the services with a lot of experience/function variables (most having to do with user interfaces and a simple way of coding messages), the user volume grew dramatically to today's position of SMS as the major data service in wireless networks, driven by price elasticity and user behavioral patterns.
Service value-add and service differentiation play crucial roles in determining what the true potential of a service is over time. The ability to differentiate services increases their market penetration, while innovative service value-adds can keep service pricing high. So, what factors drive the value-add and differentiation dimensions of Figure 5? In looking at many past service examples and assessing some new ones, the experience/function parameters described earlier can be used to provide service value-add or service differentiation over time. The challenge for the designers and marketers of new m-business offerings is to augment the experience/function parameters that are most appealing to the specified target segments and that can be engineered into the designs in cost-effective ways. If such steps are taken, then m-business offerings with potentially rising average revenue per user (ARPU) can be developed. New m-businesses that fail to take advantage of the experience/ function parameters discussed in this chapter, are likely to face declining ARPU scenarios and sink into "commodity traps," where aggressive (and usually ruinous, from a profitability perspective) pricing is the only option left (see Figure 6).
Figure 5: Enhancing M-Business Offerings via Experience/Function Improvements
Figure 6: Scenarios for Rising and Sinking ARPU Potentials for M-Business Offerings
When carefully designed for "value-add" and "differentiation," m-business services offer a substantial opportunity to create services that can be improved, evolved, and profitably marketed for extended periods of time. In a world where commoditization is a threat to revenues and profitability, this offers an opportunity to the GPRS/3G wireless operator to defend service offerings by evolving and enhancing them with new features and add-on services. Well-crafted m-business services designed for business users and consumers may just be the answer to the telecom operators' dilemma of declining revenues per user.