This section justifies on DiGi BCG Matrix by quadrant and also looks at possible strategies to handle the respective SBU.
QUESTION MARKS: MOBILE/WIRELESS BROADBAND (DATA SERVICES)
relative market share: LOW
as highlighted before, DiGi was having the smallest market share in 2009 (refer pie chart on the right)
the market is also getting crowded with many new entries in 2010 such as Time dotCom, YTL, U Mobile and Tune Talk
market growth rate:
HIGH
rising penetration rate of broadband subscribers (per 100 householders) (Source: Ministry of Finance, 2010)
4th Quarter of 2009 = 31.7% 1st Quarter of 2010 = 34.5% 2nd Quarter of 2010 = 37.5%
55 strong Malaysian government support through National Broadband Initiative (NBI) which aims to achieve 50% Malaysian household (both wired and wireless mobile) broadband penetration by the end of 2010
challenge for DiGi
increase mobile/wireless market share quickly so that it might become Stars and eventual Cash Cows or it will become Dogs
strategies
invest RM350 million for mobile broadband expansion as part of its plans to improve its infrastructure
market penetration: increase customer rewards and provide consistent good services to existing customers
- plenty of offerings and outdoor gathering in “hot buttons” of youth lifestyle areas (gaming, sports, music, movie, TV show, internet, weather forecast, games etc)
- various monthly broadband (business solutions) depending on size and budget of business entity
- BonusLink points based on monthly usage bill for postpaid broadband subscribers
market development: build CBC for rural communities in various areas in Malaysia (Sarawak, Johor, Melaka, Kelantan, Terengganu and Pahang)
product development: bring to Malaysians Huawei portable wireless router – MiFi (Mobile WiFi Device) that can have 5 different WiFi (eg combination: iPad, iPod Touch, iPhone, Blackberry and laptop or netbook) enabled devices to connect to the Internet simultaneously
STARS: SMARTPHONES (DATA SERVICES)
relative market share: HIGH
no exact figures disclose but relatively, DiGi is having a high market share for smartphones as they are selling Malaysian favourites (refer pie chart and table below): RIM‟s Blackberry, Apple‟s Iphone and Google‟s open-source Android operating system phones such as Samsung Galaxy S, HTC Legend, HTC Desire, Sony Ericsson Xperia 10 and Motorola Milestones, amongst others
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largest BlackBerry seller in SEA (2008)
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3 years contract with Apple to sell iPhones in Malaysia
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in 2008, Samsung (8GB variant) was #1 smartphone in Malaysia with 14.6% market share
Smartphone Telco
Blackberry Maxis, Celcom
31 , DiGi
Iphone Maxis, DiGi32
Samsung33 Maxis, DiGi
56 smartphones had contributed to the DiGi fast-growing mobile Internet market34
market growth rate: HIGH
percentage ownership of smartphones is still low but popularity is rising rapidly35
the potential market for mobile Internet (through smartphones) is large as there are 31 million36 mobile phones in use in Malaysia (more than 10x the estimated number of laptops and netbooks owners) as of 2nd Quarter of 2010
in 2009, mobile internet accounted for 25% of industry revenue growth rising penetration rate of cellular phone subscribers (per 100 householders)
(Source: Ministry of Finance, 2010)
4th Quarter of 2009 = 106.2% 1st Quarter of 2010 = 107.1% 2nd Quarter of 2010 = 108.8%
challenge for DiGi
maintain or strengthen dominant positions of smartphones as Stars because it is DiGi best long run opportunities for growth and profitability plus growing it into Cash Cows
strategies
market penetration: increase customer rewards and provide consistent good services to existing customers
- various data-centric packages to cater to the growing number of mobile Internet (smartphone) users
- reduce fees to replace standard SIM card with Micro SIM market development: aggressively push sales of smartphones
- encourage other service provider smartphone to switch to DiGi many rate plans while retaining the original number at no extra cost (DiGi is absorbing it)
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include casual surfers (unlimited access via handsets for RM5/day) and prepaid Internet SIM card users (inserted into modem for access via PC and laptops)
composition of data revenue in 2nd Quarter of 2010
= 65% SMS, 22% mobile internet and 13% others (Source: Asia Analytica Sdn Bhd)
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Asia Analytica Sdn Bhd, 2010
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Source: Asia Analytica Sdn Bhd
- invest RM100 million over the next 3 years in Perak and Sarawak to expand its mobile internet services footprint beyond 5 key market centres (Klang Valley, Penang, Kota Kinabalu, Ipoh and Kuching)
product development: joint venture with handheld mobile providers to include latest technologies and internet function into mobile
CASH COWS: PREPAID AND POSTPAID (VOICE SERVICES)
relative market share: HIGH
DiGi market share for prepaid and postpaid is relatively high up to 2nd
Quarter of 2010 (refer pie chart below)
however, DiGi do not disclose exact figures for its prepaid and postpaid subscribers (voice services) but lump it together with broadband customers (refer bar chart below)
market growth rate: LOW
the phenomenon on declining voice revenue is an occurrence worldwide but it is expected to remain as the main revenue earner (MCMC, 2007)
mobile voice revenue is expected to grow by 6% annually until 2013 (IDC, 2009)
challenge for DiGi
maintain prepaid and postpaid strong position for as long as possible as Cash Cows since it was yesterday‟s Stars to finance mobile/wireless broadband (Question Marks) and smartphones (Stars)
strategies
product development
- maintaining prepaid and improving postpaid momentum by offering handset bundles
-DG Family™ package allows combining prepaid and postpaid as supplementary line
-Happy prepaid37 east coast edition (Kelantan and Terengganu) targeting value seekers that mainly use their mobiles to just make calls and SMS
retrenchment
- eliminate DiGi Prepaid™ Campus package - eliminate paper billing for postpaid subscribers
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DOG: FIXED TELEPHONY (VOICE SERVICES)
relative market share: LOW
DiGi was having tiny market share in 2009 (refer pie chart on the right)
market growth rate: LOW
almost stagnant penetration rate of fixed line telephone subscribers (per 100 householders)
(Source: Ministry of Finance, 2010)
4th Quarter of 2009 = 43.9% 1st Quarter of 2010 = 44.0% 2nd Quarter of 2010 = 44.0%
fixed-line voice revenue is expected to decline 4% annually until 2013 (IDC, 2009)
challenge for DiGi
avoid or maintain fixed line telephony which is weak internal and externally as Dogs Cash if there is some profit since expensive turn-around plans usually do not help
strategies retrenchment
- eliminate fixed line telephony
- continuously provide payphones and household fixed lines as part of obligation to provide access to basic telephony communications in rural community districts designated to DiGi under Universal Service Provision (USP) 38
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