Handset maker s strategy in VAS market

Abstract

Indian VAS market has been growing at a rapid place. The market is moving away from voice services towards other value added services. Apart from ring tones and SMS s there are many new innovative services like Location Based services, mobile TV, m-commerce etc which are catching the users attention. Most of the players in the chain are reaping the moolah but somehow the handset makers seem to be left behind and operators seem to be controlling the game. The purpose of this study is to find out how can handset makers be part of this party, where should they collaborate with the mobile operator and where they can by-pass operator and reach the end user directly in order to have a bigger share of the revenue pie. Existing game theory literature was used for this purpose. The game theory literature helped us to determine the scenarios of collaboration and defection. The study encompasses the entire value chain of mobile VAS market and the recent developments in this space like Apple s i-phone, Nokia s internet services platform OVI and relationships for launch of services like I-mode. A detailed Porter analysis has carried out to have a comprehensive view of the industry. A service template was developed listing down important criterion that a handset maker should take into consideration while launching new services. This template will help the handset manufacturers to see the pay-offs of this service and what could be done to increase it. As examples two services (Location based services and Idle screen solution) were evaluated using the template. With the help of Porter s analysis of market, service template payoffs and research papers immobile services field, one formidable conclusion which came out is that handset manufacturers need to form an ecosystem of application developers, content developers and content aggregators. Further iterative prisoner s dilemma, with the game being played for every new service being launched, showed that there will always be inter-dependence between the mobile service provider s ecosystem and handset manufacturer s ecosystem. This will reduce the dominance that mobile service providers enjoy in the VAS value chain.