Author(s): Raghu Gopal
Recent concerns about the security of personal information, particularly involving Facebook's methods of collecting and sharing user data, have lifted digital business models to the headlines. People that didn't already know are learning that no-fee mobile apps and services aren't really free. Instead, personal information has become the consumer currency. This is a barter economy.
Supposedly, worries about personal data mining have led to so-called "digital suicides" among some users, convincing them to delete their social presence on digital platforms. It's difficult to say how far this trend has gone or if those people are gone for good, but there has certainly been a burst of anger over what could be interpreted as a breach of trust.
But now some smartphone users are finding that it's not so easy to disappear without a digital trace, as devices sold or leased directly by operators often come with pre-installed apps, sometimes referred to as bloatware, which can't always be deleted. This app immortality is by design the result of agreement between wireless operators and app providers. Preloaded apps have become revenue drivers for operators, with very high margins.
Smartphone users in countries where the preference is to buy handsets from operators have certainly noticed how their device storage space is reduced by pre-loaded apps. In some cases it's a matter of convenience; these can be popular platforms that the majority of users would be likely to download.
However, pre-installed apps could soon pull operators deeper into the ongoing privacy argument. Users looking for a way to back out of social services are realising that there's no emergency exit.
There had already been a trend among some subscribers to purchase smartphones separately from their mobile service provider. This has been particularly notable in the US where traditionally, device and carrier were considered inseparable. But customers have been discovering that there are other options. Although the vast majority buy their smartphones through carrier channels, we estimate that as many as 15 percent of US customers now go to the open market to get a device that isn't locked to any particular carrier.
In most cases, open-market devices also offer users a "purer" experience, with less preloaded software and more freedom for people to customise their devices.
Subscribers who opt for a bring-your-own-device plan, sometimes financing the handset directly from a smartphone maker, are always free agents, with the ability to easily change operators. For the latter, it's a riskier environment that could lead to higher churn, lower revenue, or both. They will have to monitor social trends closely and adjust their strategies in this area to reflect current consumer behaviour.
Preloaded apps are a side business for operators, and a profitable one. But operators should be certain of the effects on their reputations and ultimately their customers. It could be regarded as an aspect of social responsibility.