Paul Neilson, senior vice president of technology services for Monster Worldwide, doesn’t really care about latency statistics for push-to-talk services, kilobit-per-second measurements of high-speed wireless networks or processor specifications for advanced smart phones. The single most important factor in Neilson’s corporate wireless decision-making process involves one simple number: the price tag.
“Price is a big driver,” he said. “Functionality is secondary.”
Neilson’s outlook is largely representative of most corporate managers in the United States. Despite the pending launch of advanced wireless networks and the almost constant upgrades in mobile-phone technology, the bottom line continues to rule enterprise buying decisions for wireless services. And the importance of the enterprise market cannot be ignored-according to research and consulting firm Yankee Group, businesses pay for almost one-third of the nation’s 160 million mobile-phone bills.
“Price and coverage still make a significant difference here,” said Eugene Signorini, program manager for Yankee Group’s Wireless Mobile Enterprise and Commerce practice. “Companies are still struggling to manage cost.”
Indeed, according to the firm’s 2004 Corporate Wireless Survey, price breaks and discounts were the leading factor in the decision-making process for wireless purchases. Next on the list was coverage, followed by customer service, pooled minutes and wireless data offerings.
“It’s all about money,” said Monster’s Neilson.
Monster, a high-tech Internet company, is on the forefront of corporate buying strategies. The company started buying wireless services in bulk two years ago, a time when most of the rest of the nation’s businesses were still reimbursing employees’ wireless spending on an individual basis. Neilson said Monster buys wireless in bulk to score lower costs and more tightly oversee its employees’ wireless usage.
Most corporations have joined Monster in buying their wireless services in bulk. According to Yankee Group, 70 percent of businesses either buy wireless services directly from carriers or oversee their employees’ wireless spending. The rest of the nation’s corporations-or almost one-third-do not exert any control over their employees’ wireless spending.
Thus, business accounts are becoming more important to wireless carriers, a situation that throws back to the early days of wireless. In the late 1980s and early 1990s, the only people who could afford a $1,000 wireless car phone were business customers. However, as wireless evolved and prices dropped, most wireless carriers began refocusing their efforts on the consumer marketplace where net additions were relatively quick and simple-unlike the corporate market. Now the situation is slowly reversing itself-as wireless becomes a standard part of American life, corporations are looking to lower their expenses by taking over the procurement of wireless service. Such bulk-buying strategies usually result in lower costs and more control over the service.
Monster’s wireless service contract came up for bid earlier this year. The company had initially signed a deal with Sprint PCS for all of its wireless service when it began buying wireless in bulk two years ago. Neilson said Monster decided to renew its contract with Sprint as its wireless provider because the carrier’s bid was 26-percent cheaper than that of the next lowest bidder.
Monster’s renewed wireless contract also highlights perhaps the most important new change in the landscape for businesses: number portability.
“It certainly made the bid much more authentic,” Neilson said.
With LNP, Monster no longer had to worry about the cost and hassle of changing its employees’ phone numbers on business cards and directory listings. Instead, Neilson said LNP assured Monster’s bidders that the company could switch providers with little effort. Thus, the bidding was more genuine than if the cost of switching phone numbers was a factor.
“That magic phone number-you can take it with you-that’s phenomenal from an enterprise perspective,” said Michael Voellinger, wireless services director for Telwares Communications L.L.C. Telwares acts as a consultant to major corporations in their dealings for telecommunications services, negotiating deals between carriers and businesses. LNP “adds a lot of leverage,” he said.
Voellinger too said bulk buying has become a major aspect in the wireless industry, forcing carriers to make a concerted effort to address enterprise concerns. Although corporations are somewhat reluctant to take on the liability of owning and managing mobile phones and wireless accounts, the benefits on cost and service are in some cases worth the risks.
Wireless “is becoming a true enterprise-managed asset like a laptop,” Voellinger said. “It’s not going to be hanging out on an Excel spreadsheet somewhere.”
And it appears carriers are taking note.
“We have a different system designed just for businesses,” said Phil Bowman, vice president of integrated solutions for Sprint’s Business Solutions division.
Bowman said Sprint’s recent reorganization-which replaced the carrier’s technology-based structure with one that focused only on the needs of consumers and enterprises-was a major step in addressing corporate needs for wireless. Bowman said Sprint has also introduced a new low-cost wireless service for corporations, where prices can be lowered based on the number of employees covered by the contract. Sprint also offers a minute-pooling program, which allows employees to share unused minutes from each other’s plans.
“It’s sort of a super family plan,” Bowman explained.
Monster’s Neilson said the minute-pooling program was a key factor in the company’s decision to go with Sprint. Neilson said Sprint also agreed to give Monster breaks on its roaming fees because, as Neilson explained, “It’s not my fault that I have to roam.”
Despite Sprint’s new business focus, the carrier ranks fourth among U.S. carriers for business user market share. According to Yankee Group, Verizon Wireless is the leading carrier for business customers with 22.4 percent of the market. Nextel Communications Inc. follows closely behind with 20.3 percent, while AT&T Wireless Services Inc. clocks in with 16.3 percent and Sprint comes in at 13 percent. However, Yankee Group said Sprint controls 18 percent of the market for corporate accounts, where wireless is purchased in bulk. Yankee Group said carriers need to identify “prosumers,” or business users who expense their wireless bills to their employers, and entice them with additional deals. Yankee Group said these users typically generate 70 percent more revenue per month than other business users.
Although price remains the leading factor in corporate wireless purchases, wireless data, PTT and other advanced services do play a role. Indeed, Monster’s Neilson said 100 of the company’s sales managers use PalmOne Inc.’s Treo 600 smart phone from Sprint and use Good Technologies Inc.’s software to wirelessly access their e-mail.
Neilson said using the device “increases my amount of knowledge about what’s going on.”
Yankee Group’s Signorini said wireless e-mail remains the No. 1 wireless data application for business users. However, he said there is interest in PTT, high-speed data and other advanced wireless features and services.
“We’re very much in the nascent stages of purchasing wireless data,” he said.
“We’re at the beginning of this enterprise opportunity,” said Telwares’ Voellinger.
