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Is Orange Starting to Get A Clue?

Posted on Thursday 10 June 2004

Orange’s CEO has finally begun to recognize that selling wireless data services is not anywhere near as simple as selling cellular voice. Sanjiv Ahuja told a group of investors today that it is becoming increasingly difficult to raise the percentage of revenue his company generates from data services (primarily SMS). Orange has a target that fully one quarter of its top line will be income from data but Q1 figures show they’ve only reached 17% in the UK and 14% in France. Dow Jones reports that he said, “It’s getting harder and harder to get to the target” because voice revenues continue to climb.

Cellular executives have believed that successful data services could be simply overlaid on top of their voice networks despite ample evidence to the contrary. Those in Europe and Asia convinced themselves that the steep ramp of SMS revenues were the result of their clever marketing and business plans and that they could pull the same rabbit out of the hat again with GPRS and later WCDMA.

Silly geese. SMS took off it Europe in spite of the carriers’ lack of investment in it. They envisioned SMS as a replacement for paging services and did little to promote its use. It was years before the youth market discovered SMS and adopted it; in fact the carriers delayed investing in SMS infrastructure until they realized how easy the pickings actually were.

Just repeat after me: the killer app for cellular services is voice, the killer app for cellular services is voice, the killer app for cellular services is voice. Sheesh.

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