Apple was able to revolutionize the concept of the mobile phone, both in terms of its hardware and its ergonomic design. Then, with lowered prices, it became widely accessible and now, with the addition of 3G technology, it can use the band width it needs to take full advantage of its potent multimedia and video applications. However, in Europe, the iPhone faces a slowing telecommunications market, steep prices and a competition that has come back with new and sophisticated models.

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Title: Progress Report on the Single European Electronic Communications Market 2007
Source: European Commission
Date: March 19, 2008
Abstract: The yearly analysis done by the European Union on the state of telecommunications in the EU highlights an important advance made by the cell phone market, particularly with regard to the so-called third-generation devices, and confirms the downward trend of fixed lines, whose declining revenues are being offset by increased Internet connections and SMS messaging. It also documents the continued limitations on free competition, the lack of progress in the single European telecommunications market and the widening of the digital divide.
Corporate telecommunications investment in Europe in 2007 exceeded 50 billion euros, which matched the United States. The report makes special mention of the 3.8% growth experienced by the cell phone market, which went from 133 billion euros in revenues in 2006 to 37 billion last year. The report highlights the notable increase (20%) in 3G cell-phone subscribers, which have hit the 100 million mark.
Falling once again (-5%) were fixed-line revenues, which totaled 79 billion euros in 2007. This decline was partly offset by the significant rise of SMS text messaging and fixed broadband services, which had 100 million subscribers in 2007, some 20 million more than in 2006. Translated, this means that the average among the European population accessing the Internet with this type of connection is 16.2%. The report also underlines the price drop (14%) suffered by cell phones and roaming services, and points out the positive influence of the advent of a single bill for the range of services provided. In contrast, it reveals the slow progress of free competition in Europe, particularly in fixed voice and Internet, and warns of the unsatisfactory performance of the single European market due to the persistence of numerous barriers that need to be removed. Nevertheless, the most worrying piece of data is the widening of the digital divide existing between EU countries.

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The economic slowdown is serving as a recommendation to a few fashion brands, such as Adolfo Domínguez, to hold back on expanding their network of dedicated stores. Meanwhile, the major technology companies are banking even more on this formula as a means of reinforcing their traditional distribution channel. Vodafone, for instance, sells its products and services in department stores, multi-brand retailers, franchise chains and the up-and-coming virtual online stores, but it also has dedicated stores. Telefónica plans to open 1,000 new dedicated stores this year, which would give them 3,600 such points of sale by the end of the year. Nokia this month opened one of its own in San Sebastián de los Reyes (Madrid) and hopes to increase its number of official establishments in Spain, so that consumers “can see first-hand the latest Nokia experiences, products and services.” While more modest than its equivalents in New York and Helsinki, it does have a staff including specialized technicians as well as the added boost of promotional personnel during the weekend. Sony last November opened a dedicated store in Barcelona, its second-largest in Europe, which will allow visitors to try as well as buy its products and, according to an article in the Spanish newspaper El Periódico, “is a mix between a laboratory, a high-end gallery and a testing ground,” which they say is justified since, “it’s getting harder and harder to sell our product at point-of-sale locations.” The network is not to be confused with the Sony Gallery chain, which exclusively features Sony products but does not belong to the Japanese manufacturer. Apple, which jumped on the bandwagon with its luxurious Apple Store in Manhattan, already boasts 200 Apple Retail Stores worldwide. In Spain and the other European countries its preference has been to invest in the Apple Premium Resellers (APR), which are iPod- and Mac-dedicated retail outlets. That in addition to Apple Shops, point-of-sale locations designed by Apple for department stores. Dell, meanwhile, is using a different formula. After popularizing its sales model for PCs using virtual stores, in 2006 it opened up two physical locations featuring storefront displays, designed to showcase its products and support the 160 kiosks set up in shopping malls throughout the United States.

Articles in El País, Canal Pda and CNN Money

High expectations created by Spain’s electronic ID cards have been cut down by successive delays. Nonetheless, the number of electronic IDs issued in Spain has already surpassed the three-million mark, a critical mass that should provide a lift to the applications and services based on the new cards. The newspaper Cinco Días in February published an article saying that “by the end of 2008, six million Spaniards will have one in their pocket. It constitutes one of the largest technological investments ever made by the central government: a total of 314 million euros.” Nevertheless, noted the economic journal, companies are still not striving to apply it, and when they do it is with preexisting applications, not with new ones. The related list published on the Ministry of Home Affairs website (www.mir.es) includes 15 banking institutions that use the ID card for their online services, headed up by Bankinter, Caja Madrid and La Kutxa. Public services appear on the list most frequently due to the obligatory use of the ID card in such contexts. In that same vein, the 2nd Congress on the Electronic ID and Digital Identity will kick off in Madrid on May 20. Organized by the multi-sectoral association ASIMELEC, the event brings together developers, hardware manufacturers and specialists, who will debate the new possibilities opened up by the new ID card in the areas of e-government, electronic billing and new devices, such as TDT sets, which along with Spain’s new ID card will soon be used for online banking and electronic voting, as can currently be done on computers. Another battleground will be that of mobile technologies. In Spain, solutions are already available through operators such as Telefónica and Vodafone, but as the same article in Cinco Días says, its scope “is still relatively minor.” Thus, services such as that offered by the City of Jun (Granada), which distributed cell phones with an integrated electronic ID, are still the exception one year later, according to an article published in March 2007 by the Consumer.es website.

Articles in El País, Cinco Días, Red.es and Consumer.es
Información oficial

Outsourcing is a valid solution to fulfill the needs of large companies but its success depends on a variety of factors. IESE professors Josep Valor and Sandra Sieber, along with the consultant Valentín Porta, analyze the opportunities and risks involved with this practice in their study “La externalización de los servicios de TIC y el Business Process Outsourcing (BPO)” [“Outsourcing ICT Services and Business Process Outsourcing BPO”], excerpted here in the following article.

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On June, 12-13, the IESE campus in Barcelona will hold the 2008 edition of the BIT (Business Information Technology) Annual Conference. Each day of the conference will be aimed at a different audience. The first day will be more focused on academic discussion, while on the second day the conferences will be mainly industry-oriented. This second day will be organized around keynote speeches by the top IT managers of companies such as Correos, Celsa, Indo or BancSabadell, who will talk to the audience about how the IT adoption criteria adopted by their companies and how technology is shaping their businesses. For further information please contact Marta Wilberger.