The days when people used their mobile phones primarily to make calls are long gone. New research by professional services company Deloitte showed that about 22 percent of smartphone users in the U.K. make no “traditional” calls in a given week, using their phones instead for Internet-based messaging, social media and other web-based services. Russia is on trend, says Vasily Ryzhonkov, director of the mobile technology centre at the Skolkovo Foundation, though the Russian market has its own specifics that will determine mobile technology trends here in 2016.
Recent data showed that smartphone users are making fewer and fewer "traditional" calls. Photo: Sk.ru
As a result of the move away from phone calls to Internet-based programs, data-only packages are growing, and Deloitte suggested that mobile operators would have to add more data to packages to compete – a move that Russian mobile operators have already taken.
“If before there were packages determined by time, or the number of calls or text messages, now that’s simply no longer a priority,” says Ryzhonkov. “Now the competitive advantage is the number of megabytes you can offer your clients.”
Oleg Kapranov, chief editor of computing magazine Mir PK and the technology website DGL.ru, agrees.
“Despite unlimited [calling and messaging] bundles and bundles with limits that will never be reached being practically ubiquitous, communication via data exchange is preferred today because it’s unlimited from the start,” he said.
Russians have long used apps to order taxis, and are now starting to order services like cleaners and takeaway food through apps too, says Ryzhonkov.
But they are also using them to bypass calls and messages made via their operator in favour of messaging, phone and video-calling programs known as Over-the-Top services.
“The initiator of this kind of communication was Skype, but today it’s Facebook Messenger, WhatsApp, Viber and many others,” says Kapranov.
The 10 most popular apps by download volume in Russia in 2014, the most recent year for which data is available, reflect the demand for bytes: They included the Over-the-Top apps Viber, Skype and WhatsApp, the social network sites VKontakte, Odnoklassniki and Instagram, and the Yandex.Navigator and 2GIS navigation apps, according to App Annie, a market data analysis company.
Need for Speed
But using Over-the-Top apps to make voice and video calls is only possible where there is a very good connection, which limits the Russian market, says Ryzhonkov.
“In Scandinavia, more than 50 percent of calls are made via Skype from mobile devices,” says Ryzhonkov. “In Russia I think things are a bit different, because 4G infrastructure only began to appear two or three years ago, and only in the megalopolises, so we are physically limited to megalopolises, or to Wi-Fi networks at home and at work. It’s probably only about 3-5 percent of the population [who have the necessary infrastructure for this kind of phone use],” he explained.
Vasily Ryzhonkov, director of Skolkovo's mobile technology centre.
And the infrastructure that has been put in place has yet to pay off, he said, which has had an impact on mobile operators’ further development.
“In the ‘90s it was 2G, in the 2000s it was 3G, 4G in the 2010s and in 2020 it will be 5G. But here is the difficulty: they have built an infrastructure that isn’t paying off, financially,” says Ryzhonkov.
Consequently, he predicts that operators will invest less in new technology, instead focusing on services that will pay for their previous investments.
“It’s important for them that the phone isn’t just a phone, so they are including added value services,” he said. “Many mobile operators are launching their own messenger services now. They incorporate their own services into them, so that people use content via their services.”
A Question of Money
The other limitation on the Russian mobile technology market, says Ryzhonkov, is the social-economic factor.
“The middle class in Russia who can afford to buy these kinds of gadgets is 5-10 percent of the population. That means that the market is ultimately limited,” he says.
For the same reason, Ryzhonkov believes, 2016 is unlikely to see a surge in sales of Apple watches or similar products like the Fitbit that U.S. President Barack Obama was recently shown wearing.
“It’s all popular, but we have to bear in mind people’s purchasing power – the value of the ruble has fallen, making foreign currency [and imported goods whose prices are tied to foreign currencies] more expensive,” he said.
Ryzhonkov expects that the economic situation in Russia will probably lead to a slowdown in demand for mobile services this year, but says 2016 is an interesting time for the market, citing the recent breakthrough on the market of a fifth player, Yota.
“For a long time it was the Big Three [Megafon, MTS and VimpelCom], then a fourth appeared [Tele2] and now it’s the Big Five. The field is competitive and the number of people using the services is not growing, so competition is increasing. This will likely lead to a pricing war among the mobile operators,” he said.
Ryzhonkov also expects the companies to respond to the increased competition by creating additional services, which he hopes could boost demand for some of the services devised by tech companies based at the Skolkovo innovations hub.
“There are two trends right now among operators: the first is to create their own internal labs, such as Megafon’s MegaLabs. But MTS, for example, isn’t doing that, and we are in negotiations for them to buy some of our programs for their own services,” says the hub’s resident mobile technology guru.
He pointed out that mobile technology is not just used on phones, but on tablets and laptops too.
“In my opinion, the most successful services will be those that have cloud services and can be used on all devices, such as Viber, which can be used on laptops as well as phones,” he forecasted.
And while tapping may currently be winning out over talking, on a global level, Ryzhonkov predicts that users will eventually move away from tapping altogether.
“I think the tapping function is just a phase, and that we’ll quickly move on from it,” he says. “It’s not very convenient to use if you’re driving, for example, so we’ll probably move over to another interface.
“Voice assistants like [Apple's] Siri, Google Now and Yandex, which now has its own service, will become more and more popular. More and more services will be systemized, from arranging a cleaner to ordering a taxi or a pizza,” he said.