5. Market Structure & Value Creation

Question 1

Mobile Communications Market - Players (7)

Answer 1

• -device manufacturers
• -infrastructure manufacturers
• -network operators
• -mobile virtual network operators
• -service providers
• -content providers
• -customers

Question 2

Mobile Virtual Network Operator & Types

Answer 2

company that doesn’t own a licensed frequency spectrum & wireless infrastructure, but resells wireless services under their own brand name, using another MNO’s network

• > Subsidiary Company: e.g. congstar (Telekom)
• > OEM/Branding-products: e.g. Aldi Talk (Telefonica)
• > Resellers: e.g. klarmobil.de
• > Full MVNO: e.g. Lycamobile (using Vodafone access network)

Question 3

Motivation for mobile operators (MO) to allow MVNO on their network? (3 Strategies)

Answer 3

NETWORK UTILIZATION-DRIVEN STRATEGIES: many MO have capacity, product & segment needs -> MVNO can generate economies of scale
—
PRODUCT-DRIVEN STRATEGIES: MVNO can help MO target customers with specialized service requirements & get to customers niches

Question 4

resellers vs. MVNOs

Answer 4

in contrast to resellers, all incoming & outgoing calls = handled by MVNO’s own mobile switching infrastructure
– MVNOs receive revenues from incoming calls, the so-called interconnection fees (per minute) & not only for outgoing calls, as compared to resellers

Question 5

Market Structure in Mobile Communication Market

Answer 5

Heterogenous Oligopoly: market is dominated by a small number of middle-sized sellers with heterogenous products & many (small-sized) customers —-> there is an autonomous price interval, in which the respective organization (operator) can operate…without losing customers to competition due to rise in price & without acquiring customers from competition due to rise in price

Question 6

Classical Value Chain vs. Modified Value Chain

Answer 6

Modified: networked intermediary service setting instead of linear setting (Example: Dating services - ability to match members based on physical location - match.com users can locate their matches within an approximate geographical location automatically using their mobile device)

Question 7

Android vs. iOS Market Share

Answer 7

android market share has increased rapidly but iOS still ahead in app revenues

Question 8

Mobile Strategy of Apple & Google

Answer 8

APPLE: mobile platform for selling content, service (Apps) & hardware, offering channels against the everything is free culture of the internet, currently entering advertising market with iAd for iPhone OS 4

Question 9

Future of Mobile (Web) Apps

Answer 9

Mobile browsers are likely to gain more OS core functionality (e.g. 3D graphics processing) & HTML 5, CSS, JavaScript are expected to further improve graphical user interfaces toward native mobile apps as well as to provide more platform independence –> reduces market power of app market operators such as apple

Question 10

hardpiece of Apple’s economic cycle

Answer 10

Hardware

Question 11

Google’s economic cycle:

Answer 11

everything in order to get user information & showing the right ads at the right time