Telenor’s Irfan Khan discusses the global smartphone market

At the end of Q1 2010, Gartner, the world’s leading information technology research and advisory company, issued a report on the global smartphone operating system market. In terms of growth, Apple and Android are leading the pack with the greatest year-on-year increases in market share. Symbian remains the global leader, despite its steadily declining market share, and Windows Mobile popularity continues to decline.

Get the report at GSMA’s Mobile Business Briefing website (Requires login)

Q: What is Telenor’s perspective on the fragmented mobile operating system (OS) playing field and how is the company addressing it?

Irfan: The fragmentation of the global smartphone OS market is good. It means that we are moving away from a dominant single player. This fierce competition among OS providers offers exciting opportunities for Telenor.

Our position varies from market to market, and we are not banking on a single platform. Rather, we address local needs and market demands of a particular region when making our device decisions. Today, we see Android gaining the most traction, as there are many vendors pushing that platform now, including LG, Samsung, Sony Ericsson and HTC.

Q: What about iPhone? Is Telenor betting on Apple’s OS in particular due to its popularity?

Irfan: The iPhone has been a very successful in Telenor’s Nordic markets, specifically in terms of offering an excellent customer experience and increased data usage. However, iPhone popularity also varies from region to region. Because of Telenor’s global mindset, we are aware of the very diverse needs of our different markets and we work to address those needs through the types of devices we offer to that market. There is no single mobile OS winner from our perspective, but rather different winners for different regions and different customer segments.

Q: Last year has been coined “the year of the smartphone”, as more advanced mobile phones were in demand and the percentage of people purchasing smartphones increased. Was 2009 the year of the smartphone for Telenor?

Irfan: Yes, we have certainly seen big demand for smartphones in the higher end of the market. Although smartphones are the fastest growing device category and the largest drivers of data revenue, feature phones still represent the bulk of our deployments if we look at our global footprint. While the picture in the U.S. may look different, Telenor is more aligned with the prediction that by 2014, about 50 per cent of handsets will be features phones, 30 per cent smartphones and 20 per cent basic phones.

Q: Are you saying that for Telenor, each year is the “year of the feature phone”?

Irfan: While we do focus on our growing smartphone penetration, we also need to continuously explore the opportunities around feature phones. We must consider how we can offer our feature phone customers a smartphone-like experience through customisation, applications and widgets, which will enhance the feature phone experience and help drive revenues.

There are different ways that we can offer the integrated Telenor experience on both closed and open operating systems. For example, on closed systems such as iPhone or Blackberry, we can make relevant operator applications available, such as your monthly Telenor bill.

The open operating systems, such as Symbian and Android, offer us greater opportunity for product differentiation and an enhanced user experiences. Open operating systems allow us to develop self-branded, deeply customised handsets that cost significantly less for the end user.

Q: What are the critical factors in making a newly launched smartphone a success? What do people want?

Irfan: A significant trend we are seeing is the shift towards touch screen. Touch screens encourage the use of data services and enhance the user experience.

This trend is especially noticeable in our Nordic markets. Going forward, touch screen phones are clear winners among smartphones and possibly even feature phones.

Another trend is that prices are coming down. With more options on the market and the rise of open operating systems such as Android, the costs to the consumer are continually declining.

There is also a growing trend of making application discovery even easier on the handset. The “discovery factor” encourages usage and is critical to driving data traffic. Telenor also believes in making these applications locally relevant, providing the day-to-day information people want in an easily accessible format.

Q: How has the increased focus on operating systems affected operators?

Irfan: We’ve witnessed shift in that the OS is becoming more of a deciding factor when choosing a mobile service provider. Many customers are choosing their provider because they can offer a certain type of device, iPhone for instance. AT&T in the U.S. has made significant gains in the smartphone market due to their exclusivity with Apple.

Q: What has caused this shift in consumers?

Irfan: The Internet-centric players are shaking things up and creating new demands in the market. People may now choose a particular device because of its social networking integration, multimedia capabilities or even Skype integration.

Q: Is this why Android is such a success?

Irfan: Android’s open nature, flexibility and low costs have all contributed to its success. But primarily, Android fulfills the new, Internet-focused needs of consumers.

Q: How does Telenor respond to these changing user needs?

Irfan: Telenor is looking at all the mobile operating systems and exploring different opportunities on each. For example, Blackberry is especially popular in Telenor’s Asian markets, so we facilitate our companies in Asia to have better terms and conditions on these devices. By looking at different markets and understanding their needs, we are able to bet on an OS for that region.

Q: Does the Telenor multi-platform mentality benefit consumers?

Irfan: Telenor is in play on all the major operating systems and takes advantage of this market fragmentation, rather than being at the mercy of one particular platform. This allows us to create opportunities and work across all platforms.

Traditions are being challenged and loyalties are fading away. People want something relevant; they want a high quality user experience; and they demand the best value for their money. We listen to what are customers want and then we offer devices that are highly customised, localised and add value to their lives. It’s not about Android versus iPhone, but rather which platform best meets the local needs of the people.